Hello everyone. I'd appreciate your guidance on the following. My daughter made an excess contribution to a ROTH IRA of $6,000 in Feb'22 which was withdrawn with a regular distribution of $6,000 in April'23. We should have but did not follow the excess contribution correction process from the Trustee and did not realize it until we recently (Feb'24) received a 2023 1099-R with a J (early distribution, no known exception) in box 7. We've asked the Trustee to re-code the 1099-R to show a correction of a 2022 excess contribution, but they've said they could not due to IRS deadlines. I've calculated the earnings/loss from the contribution per Pub 590-A worksheet 1-4 and there is a loss of $210.
My question is, what do we do now? Can we ignore the 1099-R with the J code and file an amended 2022 return including a 1099-R with code P and J? Do I need to include a statement explaining this with the return? If we do this, will there be an issue later with the 2023 1099-R with code J? Or, do we file an amended 2022 return paying the 6% tax on the $6,000 and then file 2023 including a regular distribution to offset the excess contribution? Or, is there another option?
Thank you for your input.
