Retirement tax questions

No, line 11 is the AGI. The Modified Adjusted Gross Income (MAGI) for Roth purposes are calculated on the Worksheet 2-1. Modified Adjusted Gross Income for Roth IRA Purposes.

Yes, the value in the IRA contribution interview is the value that Fidelity lists on their 2024 Year End Report plus any Roth IRA contribution made for 2024 in 2025. The 6% penalty is calculated using the smaller of the excess contribution or the value of your Roth IRAs on December 31, 2024 (including 2024 contributions made in 2025). 

1. Yes, you can request to withdrawn the excess contribution plus earnings by the due date to avoid the 6% penalty. The earnings will be taxable in the year you made the contribution. 

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.

Please make sure you enter the excess contribution amount as withdrawn in the IRA contribution interview:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Continue until the penalty screen and enter the excess contribution amount withdrawn.

2. Yes, you can recharacterize the contribution as a traditional IRA  contribution. Note, the deduction may be limited if you or your spouse is covered by a retirement plan at work and your income exceeds certain levels. Please see IRA deduction limits.

If your traditional IRA contributions are nondeductible you will have a basis on Form 8606 but since you have pre-tax funds in your IRA each distribution/conversion will have a taxable and nontaxable part according the pro-rata rule calculated on Form 8606.

If you plan to do a backdoor Roth you should think about a reverse rollover where you rollover IRA money to a company plan, like a 401(k). Only pre-tax funds can be rolled from an IRA to a company plan. Therefore, you would isolate the basis and could start the Backdoor Roth procedure. But it only works if your employer allows it, not all plans do.

The recharacterization has to be reported on your 2024 return in the IRA contribution section. Please see How do I re-characterize a Roth IRA contribution as a traditional IRA contribution in TurboTax? for detailed instructions.

3. Please see What happens if I made an excess Roth IRA contribution for other options.