dmertz
Level 15

Retirement tax questions

@elpram215 , the fact that only $3,000 was excess is irrelevant to how the return of contribution is treated on your tax return.

 

The Roth IRA ordering rules do not apply to a return of contribution reported with codes J and P.

 

As I understand it you made a $7,000 Roth IRA contribution in 2024, in early 2025 you requested that that $7,000 contribution be returned and Vanguard distributed $8,100 after adjusting for investment gain.  The $1,100 is taxable on your 2024 tax return but is not subject to any early-distribution penalty.

 

In TurboTax, enter the $7,000 Roth IRA contribution.  When TurboTax indicates that $3,000 is an excess contribution and asks how much you had (or will have) returned to you, enter $7,000.  Separately, enter a code JP 2025 Form 1099-R with $8,100 in box 1 and $1,100 in box 2a.  This will cause TurboTax to properly include the $1,100 on Form 1040 line 4b.  You'll also need to claim a penalty exception on the $1,100 for Corrective distributions made before the due date of your tax return.

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