Thank you, Dmertz, for the quick and detailed response! The information you provided helps me understand several key issues better. I am, however, struggling a bit to apply that new knowledge to specific action steps in TurboTax.
I have begun the process of amending the 2024 return, and I have gone through the process of entering the 1099-R adjustments as you suggested, using the 1099-Rs for 2025 and have changed the distribution codes from 8 to J and P. So far TurboTax shows the $960 penalties gone and coming back as a refund, and the Form 5329 now shows $0 penalty in Section 4, but the Form 5329 still shows a 2023 excess (which was not the case), a $0 excess for 2024 (which should be the case), and a carry forward of Roth contribution credits for 2025. I feel like I must still have a wrong code somewhere but I've worked through the amendment several times and can't seem to clear that contribution credit for 2025. To me, that makes it appear that somehow I still show in TurboTax that I didn't remove the excess in 2025, although I am certain we did.
I appreciate your time and expertise, and would welcome any additional guidance or suggestions. Thanks!
