dmertz
Level 15
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Retirement tax questions

"They indicated I will receive a 1099-R at end of 2025 with the NIA earnings which will be taxable... they said taxable and reported with 2025 tax return since that is when I received the earnings, but I am not sure this is correct?"

 

That's correct if the distribution is from a designated Roth account in an employer-provided retirement plan like a 401(k), but not for a distribution from a Roth IRA.  However, since you mentioned an $8,000 contribution, it's reasonable to assume that the contribution being returned is a Roth IRA contribution and the taxable earnings are to be included in income on your 2024 tax return.  As such, the taxable gains are reportable on your 2024 tax return.  You do this in 2025 TurboTax by entering a code JP 2025 Form 1099-R with the total amount distributed ($8,000 plus gains) in box 1 and the gains in box 2a.  (TurboTax will ask for the year of the form.)  You can do this by either generating a dummy From 1099-R as if you have already received it or you can amend your 2024 tax return in 2025 after receiving the actual form.

 

To avoid TurboTax assessing a penalty due to the code-J being present to indicate that this distribution is from a Roth IRA, claim the penalty exception on the box 2a amount  for Corrective distributions made before the due date of the return.

 

There is no requirement in the tax code that a return of a Roth IRA contribution before the due date of the tax return be a return of an excess contribution.

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