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Level 2

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

I made excessive contributions to a Roth IRA in 2017. Before I filed my 2017 last year I removed the excessive contribution in Feb 2018 and my brokerage reported earnings on those excessive contributions. I reported the net contributions in the 2017 return (removing the excess contribution), but I didn’t report the earnings. 

Now in 2019,  I received a 2018 1099-R showing the $xxxx contribution with $yyy earnings with a PJ code for that excess contribution.  Do I amend my 2017 return to report the $yyy earnings in that 1099-R? Do I also report that 1099-R in my 2018 return even though I am amending 2017 return? 

8 Replies
Level 20

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

Yes, the earnings need to be included as income on your 2017 tax return.  You'll do that in 2017 TurboTax by entering the code PJ Form 1099-R and in the follow-up indicating that it's a 2018 Form 1099-R.  You are also subject to a 10% early-distribution penalty on the earnings if you were under age 59½ at the time of the distribution.  If you were older than 59½ you'll need to claim on line 2 of Form 5329 an Other reason exception to the early-distribution penalty.

Your question suggests that your modified AGI was in the phase-out range for a Roth IRA contribution, so the addition of the earnings to your AGI will cause more of your Roth IRA contribution to be excess unless you had returned to you more of the Roth IRA contribution than TurboTax originally indicated was in excess, so you'll still have some amount of 6% excess contribution penalty for 2017.  If that's true, it's too late to correct this remaining excess for 2018, so you'll also have a 6% penalty on this amount for 2018 unless you can apply the excess as a 2018 Roth IRA contribution.  (If you have already made the maximum permissible amount of new Roth IRA contributions for 2018, you can obtain a return of contribution for enough of the new contributions to make room to treat the excess as part of your 2018 contributions, keeping in mind that any earnings required to be distributed with a returned 2018 contribution will add to your AGI.)  Otherwise, take a regular distribution in 2019 of exactly the amount of the excess (with no adjustment for investment earnings or loss) to eliminate the excess for 2019.

If the code PJ 2018 Form 1099-R has no tax withholding shown in box 4 there is no need to enter it into 2018 TurboTax and TurboTax will ignore it if you do enter it (except to remind you that it was reportable on your 2017 tax return).

Level 2

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

Will TT auto calculate the penalties (10% and 6% penalty) in the 2017 amendment?

The excess contribution returned was $1,537 plus earnings of $142 for a total return of $1,679. I re-contributed that total in the Roth IRA in 2018 immediately after it was returned.
Level 20

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

Yes, 2017 TurboTax will calculate the 10% early-distribution penalty of $14.  The $142 of additional income will likely cause an additional amount of about $50 of your 2017 Roth IRA contribution to be excess.  2017 TurboTax will calculate the 6%, $3 excess-contribution penalty on this excess.
Level 2

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

So the 6% penalty ends in 2017? I applied the excess as 2018 contribution. I won't be over the 2018 modified AGI this year for the phase-out range of Rotth IRA. In 2017, a property sale caused me to go over.
Level 20

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

You deposited $1,679 as a new Roth IRA contribution, unrelated to the fact that the cash came to you by way of a return of contribution.  The only excess that you would have to apply as a 2018 contribution would be the approximately $50 that I'm guessing will be your remaining 2017 excess after including the $142 of additional 2017 income on your 2017 tax return.

Ideally you would be beginning your 2018 tax return by transferring in from your amended 2017 tax file, but you can also manually enter the presumed $50 remaining excess from 2017 by clicking the Continue button on the Your 1099-R Entries page in 2018 TurboTax to reach this entry.
Level 2

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

Ok. I think I got it now. Thanks!
Level 2

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

In the 2017 Amendment return, Schedule X, Reason(s) for Amending - do I check the box "Other" and explain the reason? I don't see that the other reasons listed match my case.
Level 20

Do I amend 2017 return for 2018 1099-R of a Roth IRA excess contribution made in 2017 which was was removed in 2018? The excess contribution made earnings.

Seems reasonable to me.