Excess 2022 contribution to ROTH IRA

[cleech2012]

Looking for how to resolve excess 2022 contribution to ROTH IRA.

What isn't matched by earned income needs to be mapped to 2023.

Turbotax DOES allow me to show creation of ROTH IRA in 2022 and its appreciated but how to show that the excessive contribution belongs as part of future tax year 2023??

Does my plan administrator need to give me a revised 1099R?

Or can I do everything within Turbotax (desktop version) 2022 tax year?

I already submitted tax filing. Do I then owe a revision to my 2022 tax filing?

Reading the tax code it is time sensitive and must be resolved by 4/15/2022 or there is penalty of 6% per amount over what matches earned income 2022 per year (so longer I wait, greater the penalty).

Anybody reading this needs to also consider their MAGI (there is a limit for having roth IRA - MAGI must be lower than the limit established every year by the IRS). Else read the published segment on backdoor contributions  nicely documented in a separate help thread.

[DanaB27]

You will need to request the withdrawal of the excess contribution plus earnings with your financial institute by the due date to avoid the 6% penalty.

If you withdraw the excess plus earnings by the due date you will enter on the penalty screen during the Roth contribution interview that you withdrew the excess amount.

You will get a 2023 Form 1099-R  in 2024 with codes P and J for the withdrawal of excess contributions and earnings. This 1099-R will have to be included on your 2022 tax return and you have two options:  

• You can wait until you receive the 2023 Form 1099-R in 2024 and amend your 2022 return or
• You can report it now in your 2022 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2023 Form 1099-R into the 2023 tax return since the withholdings are reported in the year that the tax was withheld. The 2023 code P will not do anything to the 2023 tax return but the withholdings will be applied to 2023.

To create a Form 1099-R in your 2022 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2022?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On the "Which year on Form 1099-R" screen say that this is a 2023 Form 1099-R.
11. Click "Continue" after all 1099-R are entered and answer all the questions.
12. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 click and removed the excess after December 29, 2022, then enter it next to "Corrective Distributions made on or after December 31, 2022"

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2021" you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2022.