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seanjohn26
Level 1

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

The "Learn More" example in this section appears to me to be correct. However, the prompt "Roth IRA Contributions prior to 2020" is misleading in my case. Here's why. I contributed $24,799 to my Roth IRA in years 2013-2019 (this is the total amount including contributions from all of these years). In 2020, I contributed an additional $3,000 (new grand total for contributions is $27,799), after which I took a distribution of $27,500 (in the year 2020). The way this prompt is worded (Roth IRA Contributions PRIOR to 2020), I should enter "$24,799". However, if I do that, then I will be paying an early withdrawal penalty on $2,701 ($27,500-$24,799). This is not correct though since I contributed $27,799 prior to withdrawing $27,500. I am only withdrawing from my contributions, not from earnings. There should be no penalty. The prompt should instead ask me to enter my total contributions up to 2020 and including 2020 ($27,799), but only up to my withdrawal date. Right? The example seems to show it this way, but the prompt seems to suggest otherwise. ?

1 Best answer

Accepted Solutions
macuser_22
Level 15

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

It asks for you "prior" year (before 2020) contributions.   2020 contributions are entered in the IRA contribution interview and will be applied to the total contributions.

 

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

A Roth IRA contribution does not actually go on a tax return, but you should enter it anyway to:

1) Tell you if your income qualifies you for a contribution and warn you if it does not.
2) Check if your income exceeds the limit to contribute to a Roth.
3) Track your contribution year-to-year if you use TurboTax every year.
4) Add the Retirement Savers Credit if you qualify.Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

9 Replies
macuser_22
Level 15

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

It asks for you "prior" year (before 2020) contributions.   2020 contributions are entered in the IRA contribution interview and will be applied to the total contributions.

 

Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

A Roth IRA contribution does not actually go on a tax return, but you should enter it anyway to:

1) Tell you if your income qualifies you for a contribution and warn you if it does not.
2) Check if your income exceeds the limit to contribute to a Roth.
3) Track your contribution year-to-year if you use TurboTax every year.
4) Add the Retirement Savers Credit if you qualify.Enter IRA contributions here:
Federal Taxes,
Deductions & Credits,
I’ll choose what I work on (if that screen comes up),
Retirement & Investments,
Traditional & Roth IRA contribution.

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "ira contributions" which will take you to the same place.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

lad20
Level 1

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

A similar question - about the description of the "learn more" line, specifically, "Confirm net regular contributions prior to 2020 that "remain" in the Roth IRA".  I had 10,500 in total contributions to the Roth in prior years (before 2020), and in 2020 made distributions of 11,500.  No other distributions prior to 2020 were made.  Do I answer the question as 10,500 or 0, since no regular contributions remain in the Roth at 12/31/2020?  Only the gains remain at this time.

dmertz
Level 15

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

$10,500, the amount of contribution basis that carried into 2020 from the prior years.

cempdx51
New Member

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

Do I enter ALL contributions in history of the IRA in this  box?

macuser_22
Level 15

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020


@cempdx51 wrote:

Do I enter ALL contributions in history of the IRA in this  box?


It depends on which box you are referring to that the type of IRA, Traditional or Roth.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
cempdx51
New Member

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

I was referring only to a Roth IRA, with personal deposits, no rollover.  thanks!

macuser_22
Level 15

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

You can always withdraw your own Roth contributions tax and penalty free.


One of the followup questions will ask for your prior year** contributions not previously withdrawn. Those contributions that still remain in the Roth will not be taxed or subject to a early withdrawal penalty. That will add a 8606 form to your tax return with the Roth contribution and tax calculation in part III.

Note: **Prior year - any current year Roth contributions should be entered into the IRA contributions section. They will not show up in the prior years contributions but will be accounted for on the 8606 form that calculates the taxable amount.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
MsWillow
New Member

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020

So, I get this question because I withdrew for 2 years and then deposited for 2020 and 2021. I was over 60 when I did my withdrawals. I've had this account since 2000 and may have covered traditional funds along the way. I don't have every contribution back 20 years and my bank only goes back 10 years. How do I answer this question?

macuser_22
Level 15

Enter Prior Year Roth IRA Contributions - Roth IRA Contributions prior to 2020


@MsWillow wrote:

So, I get this question because I withdrew for 2 years and then deposited for 2020 and 2021. I was over 60 when I did my withdrawals. I've had this account since 2000 and may have covered traditional funds along the way. I don't have every contribution back 20 years and my bank only goes back 10 years. How do I answer this question?


If over age 59 1/2 then there is no penalty so you can just enter zero.   Your 1099-R should have a box 7 code Q or T.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
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