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You are correct in your understanding.  The Code J implies an Early distribution from a Roth with no known exception which is why the penalty is being assessed.  But since this is a timely withdrawal of earnings on an excess contribution to Roth, you can follow these steps to eliminate the penalty.   Go to Federal and Income in TurboTax online Find IRA, 401(k) and pension plan withdrawals - click Add/Edit then click Done Click Continue to get to a screen "Let's see if we can lower your tax bill"  Click Continue Hit the pencil icon to edit who may qualify for a penalty exception Select IRA, then Continue On "These situations may lower your tax bill", scroll down to "Corrective distributions made before the due date of return"  then enter the $ amount of the distribution of earnings reported on your 1099-R Once you take these steps, this will eliminate the penalty on the earnings distribution.