1099R Distribution of Original Contribution

[Anonymous]

Hi.  I contributed $5500 to my Roth IRA less than 5 years ago and in 2022 I withdrew my original contribution of $5500 but left the little bit of earnings received from my investment.  I am 50 but my understanding is that you may withdrawal your contribution at any time without penalty.  The 1099R is coded with a distribution code of "j" which I believe is incorrect as by entering this I am heavily penalized.  I have talked to everyone and getting nowhere in trying to get this corrected.  How do I ensure that I am not penalized and/or am I missing something?

[MaryK4]

Because you did not have the ROTH IRA open for five years, you incurred the 10% penalty for the early withdrawal which is imposed on the entire distribution.

[dmertz]

Code J is correct.

After entering the Form 1099-R, click the Continue button on the page that lists the Forms 1099-R that you have entered.  Answer Yes when TurboTax asks if you want TurboTax your Roth IRA basis,  When TurboTax asks for your Roth IRA contribution basis, enter $5,500.  TurboTax will calculate on Part III of Form 8606 the zero taxable amount of your Roth IRA distribution.  Because the distribution is nontaxable it is also not subject to any penalty.

[Anonymous]

Hi Mary,

Thank you for the response.  According to the IRS there are no stipulations when it comes to withdrawing your "contribution", only to the earnings.  As I only removed my contribution and zero earnings, the 5 year rule shouldn't apply.  If I am overlooking something please let me know.  

[Anonymous]

Hi DMertz,

Thank you, this worked.  I appreciate the help.