Clarification on Roth IRA Excess Contribution and 1099-R Reporting

[danhui_li]

I have a question regarding the reporting of excess Roth IRA contributions for our 2023 and 2024 tax returns. Here’s a summary of our situation:

• In 2023, both my husband and I contributed $6,500 each to our respective Roth IRA accounts.

• When filing our 2023 tax return in 2024, we realized that our AGI was over the threshold, making us ineligible for Roth IRA contributions.

• As a result, we removed our contributions along with the associated earnings before the 4/15/2024 deadline:

  • My Account: Removed $6,500 contribution + $1,693.96 in earnings. Federal tax withheld: $169.40; State tax withheld: $118.58.

  • My Husband’s Account: Removed $6,500 contribution + $2,110.87 in earnings. Federal tax withheld: $211.08; State tax withheld: $147.76.

• Additionally, in early 2024, my husband made a $7,000 Roth IRA contribution for the 2024 tax year. However, since we anticipate exceeding the AGI limit for 2024 as well, he removed this contribution along with earnings in 2024:

  • Husband’s 2024 Contribution Removal: $7,000 contribution + $237.16 in earnings. Federal tax withheld: $23.71; State tax withheld: $16.60.

• When filing our 2023 tax return, since we had removed the 2023 contributions before the deadline, I selected “No, we didn’t contribute to a Roth IRA in 2023.”

• In early 2025, we received three 2024 Form 1099-Rs:

  1. One with code PJ for my husband’s 2023 excess contribution removed in 2024.

  2. One with code PJ for my 2023 excess contribution removed in 2024.

  3. One with code 8J for my husband’s 2024 excess contribution removed in 2024.

My understanding is that I need to include all three 1099-R forms in our 2024 tax return since taxes were withheld. Additionally, I will need to amend our 2023 tax return to report the earnings.

Here’s my question:

What amount should I enter under "Corrective distributions made before the due date of the return" for both the 2024 tax return and the amended 2023 tax return?

[MinhT1]

The corrective distributions should be entered inclusive of the related earnings.

[danhui_li]

Thank you for answering my question. Just want to clarify, should I enter both contribution and earnings?

Just FYI we file jointly.

• For our 2023 amended tax return, when entering the corrective distributions made before the due date, I should enter the total amount removed (contribution + earnings) for both myself and my husband.

  I should enter $6,500 + $1,693.96 = $8,193.96 for myself and $6,500 + $2,110.87 = $8,610.87 for my husband.

• For our 2024 tax return, when entering the corrective distributions made before the due date,, I should enter the total amount of 2024 contribution removal (contribution + earnings).

  I should enter $7,000 + $237.16 = $7,237.16 for my husband.

Is my understanding correct?

Thank you!

[DanaB27]

You only need to enter the earnings listed in box 2a since only the earnings are taxable and need to be exempt from the 10% early withdrawal penalty.

For 2023 $1,693.96 for yourself and $2,110.87 for your husband.

For 2024 $237.16 for your husband.

@danhui_li