Hello experts,
I filed my 2023 taxes on April 2024. I included a 1099-R for rolling over my 401k into my Traditional IRA. Few days ago (end of December 2024) I received a 'duplicate' 1099-R for the tax year 2023 from the 401k administrator, where now a portion of the funds got recharacterized as 'not eligible' (about $4,600) . The reason, as I understand it, is that later in 2023, the company I worked for in 2023 went out of business, and their 401k play year was cut short, making some of the contributions not eligible for 2023. And again since the 401k plan was terminated, I had to rollover the 401k funds into an IRA quickly ( at the end of 2023). Now I find myself with: a) an excess 2023 contribution into a 401k that got dissolved b) a 2023 rollover into an IRA that had a $4600 or so as not eligible funds. Since I just found out, it is too late now to undo these contributions in time to avoid consequences. So, two questions please:
First:
I understand that I will have to amend my 2023 returns, to include the new 1099-R with the taxable portion. Not fun, but I do not see any other choice. Right? My only question about this part is: why do they call the new 1099-R 'duplicate' and not 'corrected'? TurboTax does ask me if the new 1099-R forms are 'corrected' forms. I am tempted to say 'yes' but technically they have a 'duplicate' box checked and no 'corrected' box that I can find. So are these forms 'corrected' or not?
Second:
what do I do with the portion rolled over into the Trad IRA? Do I take it out as excess contribution with its earnings? If so, the current IRA administrator will code that entire distribution as due to 'excess contribution for 2023' and the entire amount might become taxable to me again (instead of just the earnings portion'. Even if I tell my current IRA administrator not to apply any tax withholdings, how do I enter in Turbotax that the principal portion that I am taking back had already being taxed by the 1099R corrected/duplicate? Do you recommend a different way to go with regards to the IRA?
Thank you very much
