"Roth IRA"
Is this a Roth IRA? If yes, then the following information is important. If it is not a Roth IRA, you need a corrected 1099-R. (What are the actual letter and number codes? It should be J or maybe J7.)
When you withdraw from a Roth IRA, you always withdraw contributions first, then conversions, then earnings last. Withdrawal of contributions is always tax-free, no exception is required. Withdrawal of conversions is subject to a 10% penalty if it is less than 5 years since the conversion event. Withdrawal of earnings is subject to income tax plus a 10% penalty if you are under age 59-1/2 or the Roth has been open less than 5 years.
Suppose your current Roth balance is $50,000. Over the years, you contributed $30,000 and never taken a withdrawal before or done a conversion. That means you have $30,000 of contributions and $20,000 of earnings. If you withdraw less than $30,000, you are only withdrawing contributions and it is all tax free. No special reason or exception is required. If you withdrew $40,000, then $30,000 is tax-free and the $10,000 of earnings is subject to income tax plus a 10% penalty if you are under age 59-1/2. You could apply the COBRA exception to the 10% penalty on the $10,000 withdrawal of earnings.
However, turbotax does not know what your contributions, earnings, and conversions are, you have to tell the program. If you enter a 1099-R with code J, you should be asked by the program, how much have you previously contributed, how much have you previously converted, and how much have you previously withdrawn. If you answer those questions correctly, the correct tax will be calculated. But only you have those records, and you are required to keep those records to prove your claims in case you are audited.
