I have a similar but different situation, made an excess Roth contribution of $6500 in 2023 and realized it before filing this year. Difference is that I had losses of $2147.41 making my withdrawal $4352.59. I posted the question on here of how to handle this on my taxes and it was answered similar to what you’ve described. I was told to do a substitute 1099-R, enter $6500 in box 1, then code P and code J in box 7 and for year 2024, which I did. I was told that since this amount is more than the broker will report, the IRS won’t be concerned about it, they’d only be concerned if it were less.
Looking at my forms though, it shows on line 4a the $6500. distribution and line 23 other taxes of $390 from schedule 2(additional tax on IRAs) this also shows on form 5329 line 25. I did notice that line 22 of form 5329 (prior year excess contributions) shows my $6500 contribution instead of it being on line 23(excess for 2023) although I don’t believe this is generating the $390 in extra tax. What am I doing wrong, as I didn’t think I’d be paying taxes on this?
