@Kmalesh wrote:
Thank you macuser_22 for all detail information. Reg 5329 , I am not able to see that form in my TurboTax Delux Software, if you can guide me where I can see it.
I am 40 year old and have deposited $5500 into my wife traditional IRA account in ~Dec 2019 for 2019 year contribution, but due to total gross salary exceeded its limit, I cannot take tax advantage on that deposit, so requested to withdraw [non-deductable / excess contribution]. Fidelity sent me excess contribution amount $5500 and earnings [ $11.05 ] along with a letter, and Fidelity will send my 1099-R form in Jan 2021. I think I have to file this withdrawal in 2019 tax filling, right ? Can I file TAX online using TurboTax or I have to file paper base due to form 5329? If online I can file, then where I can find this form in Turbo TAX delux SW, as not seeing it anywhere. Do I have to file any other form along with 5329 ?
Note: My wife is working part time and her employer doesn't cover "Retirement Plan at Work", so I created her traditional IRA account.
@Kmalesh This thread is about an entirely different situation - a missed RMD for someone over age 70 1/2.
A return of contributions is totally different. See below:
*IF* you requested a return of contributions due to an excess contribution and the excess was removed before the extended due date of the 2019 tax return and the earnings were also returned and you know that the IRA custodian will report this as a return of contribution and not as a normal distribution but as a return of contribution with a code "P" in box 7 - then:
You can just report it now and ignore the 1099-R when it comes .
You would enter the 1099-R with the total distribution in box 1 (the contribution plus the earnings),
The earnings in box 2a,
Enter code "P" in box 7 - don t worry that it will say "taxable in 2018 "
Check the IRA/SEP/SIMPLE box.
On the "Which year" screen say that this is a 2020 1099-R. - That makes it taxable in 2019 and not 2018
After the 1099-R summary screen press continue.
If you are over 59 1/2 then on the "Lets see if we can lower your tax bill" enter the box 2a amount in the "Another Reason" box to eliminate the 10% early withdrawal penalty on the earnings.
Enter the explanation for the excess contribution and that you are reporting a 2020 1099-R on your 2019 tax return to avoid having to amend in 2020.
The box 2a earnings will be taxable income reported on line 4b on the 1040 form and if under age 59 1/2 will also be subject to a 10% penalty on a 5329 form that will be reported on line 59 on the 1040 Schedule 4 form. |
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
