Retirement tax questions

Yes, you would have to request the return of the 2024 excess contribution plus earnings with your financial institution. They usually will calculate the gain for you. The earnings of the excess contribution would be taxable on your 2024 return. You could remove all excess from the Roth IRA since generally when you contribute to both traditional and Roth then the excess is deemed to have happened in the Roth IRA (IRS).

If you made an excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 with codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:  

• You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
• You can report it now in your 2024 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to your income to the 2025 tax return income but the withholdings will be applied to 2025.

To create a Form 1099-R in your 2024 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2024?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

For the 2022 and 2023 excess you will request a regular distribution without earnings since it is after the due date. This distribution will be reported on your 2025 return.

Yes, you will need to pay the 6% penalty on your 2022, 2023 and 2024 return for the excess contribution for 2022 and 2023.

• On your 2022 your will pay the 6% penalty on the 2022 amount (enter all your contributions in the IRA contribution section).
• On the 2023 and 2024 returns you will pay the 6% excess on the 2022 + 2023 excess amount.

Please see How do I amend my federal tax return for a prior year?

Yes, you can file the 2024 before finishing the amended return. To pay the 6% penalty on your 2024 return:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select "Traditional IRA" and “Roth IRA”
4. Enter traditional IRA contributions and continue through the screens
5. Enter Roth IRA contributions 
6. On the "Do you have any Excess Roth Contributions" answer "Yes"
7. On the "Enter Excess Contributions" screen enter the total excess contribution from 2022 and 2023.