2023 1099-R with PJ in BOX 7

[krish-C]

Hello,

I have a question about 1099-R I received for year 2023 with codes PJ in Box 7.

While filing my 2022 returns in 2023, turbotax advised me to remove an excess contribution of $4000 that I made to my Roth IRA.
I withdrew the excess $4000 along with gains before filing my 2022 returns in March 2023. I did not receive a 1099-R to file with my 2022 return.

Fast forward, I received a 1099-R for 2023 showing this distribution. Box 1: $4000 ; Box 2b: both unchecked; Box 7: PJ

Turbotax is triggering a 6% penalty for this distribution in my 2023 filing. Also, I am being instructed to amend my 2022 return. How can this be handled? I believe there should not be a penalty since the excess with gains were for 2022 contribution was removed in March 2023 before the 2022 taxes were filed.

When I tried to amend my 2022 return to with the 2023 1099-R, I'm being informed that there is no need to amend it.

Please advise me address this situation.

Thanks
Kris

[dmertz]

I suspect that you mistakenly told TurboTax that you had a $4,000 excess contribution from 2022.  You had no such excess contribution because you timely corrected the excess.  When TurboTax asks if you made any excess contributions, be sure to answer No (or perhaps answer Yes and delete the $4,000 entry mistakenly made there).

[krish-C]

Thanks for the response. I don't see a option in turbotax where I could have specified the $4000 as excess contribution. I imported the 1099-R into my 2023 file and the program automatically calculated the 6% penalty. I don't think missing any question / step in Turbotax.

[dmertz · Accepted solution]

There is no mechanism in 2023 TurboTax that would cause TurboTax to add a 6% penalty upon entering a code PJ 2023 Form 1099-R.  In fact, 2023 TurboTax ignores such a Form 1099-R other than to remind you that any taxable amount shown in box 2a was reportable as income on your 2022 tax return.  Perhaps the 6% penalty is resulting form excess was carried in from your 2022 tax file due to not properly completing your 2022 tax return to indicate that the excess was timely corrected, or you have simply entered a new excess contribution.

[krish-C]

I understand it now. Let me review it again and hopefully it goes away. Thanks so much.