I agree it might best to file an extension to figure out without time pressure what to do next. Please see How do I file an IRS tax extension?
I agree that most people wouldn't have noticed that there is an issue and would have file the Form 1099-R as shown and the IRS probably would never question it since the Form 1099-Rs show $0 earnings in box 2a.
If you choose not to ignore it you would have to file an 2023 amended return return to pay the 6% penalty. If you are able to earn enough in 2025 you could apply all of the excess as a 2025 contribution.
Since they didn't take the earnings out the Form 1099-Rs show are regular distribution and should have code 1(if you are under 59 1/2) or 7 (if you are over 59 1/2). Entering a 2024 Form 1099-R with code 1 or 7 would resolve the 2023 excess. Is the custodian willing to change the code from P to 7?
[Edited 4/12/2025 | 12:35 pm PST]
@susieq1013
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
