After facilitating a traditional IRA excess contribution removal, how do I properly document this on my '25 taxes? I recovered the funds into a standard brokerage account

[nick-russett]

Traditional IRA contribution was discovered to be non-tax deductible after preparing my taxes. Filed a Return of Excess Contribution, now unclear on how to properly document these activities in my tax paperwork

[RogerD1]

You are allowed to make a traditional IRA contribution and keep it in the plan, even if it isn't deductible - you just won't get a tax deduction for it.  That is, as long as your contribution for 2025 doesn't exceed $7,000 for those under 50 years old or $8,000 for those 50 years old or older.

Since you have already withdrawn the contribution and moved it to a brokerage account, how (or if) you report it on your taxes will depend on whether this was considered an excess contribution and when you removed the funds from the account.  If you removed the funds in 2025, you should have received a 1099-R from the custodian of your IRA that you would report on your taxes along with the contribution amount in the Deductions and Credits section.  If you didn't remove the funds until 2026, this 1099-R won't be issued until the beginning of 2027.

If you removed the funds in 2026, report the IRA contribution in TurboTax.  If the amount you contributed is considered an excess contribution, TurboTax will let you know the excess amount.  You've already withdrawn those funds, so you will just let TurboTax know that you withdrew them before the tax deadline.  You'll also need to withdraw the earnings and report them on your 2025 return because they will be taxable.  If the withdrawn amount is not an excess contribution, just report the contribution amount and you'll be good to go.

Even though you took this as a distribution, you really weren't required to do so if it wasn't an excess contribution.  It's going to be taken as a distribution and part of it may be taxable based the total value of your traditional IRA accounts and the amounts of pre-tax and non-deductible contributions.

If you have additional questions or need further clarification, please reply back with as much detail as possible (no personal info though) and that will help us to better help you.

[wcjj]

But how do you enter it into the Turbo Tax program? I entered it through creating an additional 1099-R. However, my understanding is the IRS requires an explanation be attached. I cannot find anywhere to enter an explanation.

[DaveF1006]

When you entered the addtional 1099R, there is a follow up screen that appears after your entry entitled "Do Any of These Situations Apply to you?" Here you need to check "I need to file a substitute 1099R". 

As you navigate through the return after checking that box, there will be a screen that appears that mentions Substitute 1099R agreement. The follow up screens that appear will address the explanation that you are referring to. 

[user17754982239]

I removed excess contribution for 2025 from my traditional IRA this year. I left my contribution in my Roth IRA. Turbotax gave me the option to say I removed excess contribution from my Roth, but not from my traditional ira. How do I report that I removed the excess contribution from the traditional IRA account? Thank you

[RogerD1]

Was the excess contribution to the traditional IRA because you exceeded the contribution limit ($7,000 for under age 50, $8000 for age 50 or older) for the total of both contributions?  Or because the total of both contributions exceed your total earned income?  If the total contribution to both types of accounts did not exceed the limits, you cannot have an excess traditional IRA contribution - but if your income exceeded a certain amount, you could have a non-deductible contribution to a traditional IRA.  A non-deductible contribution would not need to be removed - it just wouldn't give you a benefit of reducing your taxable income.

Roth IRA contributions can be considered excess if your income exceeds the limits, but traditional IRA contributions can always be made regardless of income - they just may or may not be deductible.

If you were eligible to make a Roth IRA contribution (TurboTax would let you know if you were), and your traditional IRA contributions were removed because you were over the contribution amount, you would need to remove the excess amount plus any earnings on that excess before the tax filing deadline (but that can be extended to October 15th, if you want to file an extension).  If you only removed the contribution and not the earnings, the earnings on that contribution that remain in the account will still be subject to the 6% penalty for funds excess contributions left in the account.

If you could provide more information about whether the excess contribution has to do with both contributions exceeding the limit, or if you through it was an excess contribution because it wasn't deductible, that will be helpful in getting you to the right solution for this issue.

[wcjj]

Thanks, I finally figured it all out. Seems like with this program you have to go around your a** (twice) to get to your elbow. Thanks again.

[user17754982239]

Thank you for the response. To clarify, the excess contribution is because I exceeded the $7,000 combined limit across both accounts. I contributed $7,000 to my Traditional IRA and $7,000 to my Roth IRA in 2025, for a total of $14,000 — which is $7,000 over the limit.

I completed an IRA and ESA Excess Contribution Removal Form with my custodian and removed the $7,000 plus $132 in earnings from my Traditional IRA. The funds were moved to a taxable brokerage account with the same custodian. My custodian will not be issuing a 1099-R until early 2027.

TurboTax is flagging the excess on the Roth side and giving me the option to report that I withdrew excess Roth contributions — but I actually withdrew from the Traditional IRA, not the Roth. How do I correctly report in TurboTax that the excess was removed from the Traditional IRA so that my Roth contributions remain intact?

[RogerD1]

Is TurboTax flagging Roth contribution as excess even after you removed the entry from the traditional IRA?  If so, that would be because your income is too high to make you eligible for a Roth IRA contribution.  For 2025, your Modified Adjusted Gross Income needs to be $150,000 or less for single filing statuses, $236,000 or for Married Filing Jointly or zero for Married Filing Jointly in order to make a full contribution.  The Roth contribution limit is phased out above these incomes until $165,00 for single filing statuses, $246,000 for Married Filing Jointly, or $10,000 for Married Filing Separately.  When the MAGI is at or above those limits, then no Roth IRA contribution is allowed.

If your income is at or below the limits to make a full Roth IRA contribution, be sure to remove the entry for the traditional IRA contribution in TurboTax.  Then follow these steps to create a 1099-R to report the removal of the traditional IRA:

1. Go to the Income section and scroll down to the Retirement Plans and Social Security section and click Start or Update for IRA, 401(k), Pension Plan Withdrawals (1099-R)
2. Click Yes to Did you get a 1099-R in 2025?, then Skip Import on the next page
3. Click the upper left tile for Financial institution or other provider (1099-R) then Continue
4. Enter the information for the custodian of the traditional IRA, including their Payers TIN (you may need to call the provider or look that up on line to get that number) - then Continue
5. On the Enter your 1099-R details from [IRA custodian name], enter the following
   1. Box 1 is the total amount of the contribution and the earnings - $7,132
   2. Box 2a is the Taxable amount of that, which is the earnings - $132
   3. In Box 7, enter a distribution code of P, then scroll down and click Continue
   4. Check the IRA/SIMPLE/SEP box
6. For What year is on your Fidelity 1099-R, check 2026
7. Check None of these apply on the next page, then Continue
8. Check No, then Continue, then click Done on the Your 1099-R summary page
9. Answer the question about disaster distributions and click Continue
10. On the Return of contribution summary page, click the pencil icon to the right of your name and enter an explanation of why you removed the contribution, then Continue, then Continue on the next page

You will receive a 2026 1099-R next year that you won't report on your 2026 because you reported it in 2025.  Just file this form with your tax documents when you receive it.

If you find that you are not eligible to make the Roth IRA contribution because of income limits, you will need to remove the earnings and either recharacterize the Roth IRA contribution to a traditional IRA contribution, or else remove the contribution and earnings from that account as well.  If you recharacterize the Roth IRA to a traditional IRA, you can then convert it back to a Roth IRA using the Backdoor Roth strategy.  And yes, this does get you back to the same place you were before, but it's the only way possible to eliminate the 6% excess contribution penalty.

You may want to consider filing an extension if you need to recharacterize or remove the Roth IRA contribution and earnings.  The extension will give you some extra time to take care of all these steps, but just keep in mind that the extension is only an extension of time to file and not an extension of time to pay.  Plan to pay an estimated amount of any balance due you may owe for the IRS or state tax returns by 4/15/26 to avoid interest charges on late payments.