Excess contribution in traditional ira withdrawn before due date

[dennisrstewart]

do you include the earnings or just the excess contribution?

[ThomasM · Accepted solution]

If this was a 2016 Traditional IRA contribution you've taken back, then you won't have a 1099-R until next year.  So you'll use the 1099-R entry screen and create your own.

Put the combined total of contributions plus earnings in box 1, and only the earnings in box 2a.  The only other box  you'll need to make an entry in is box 7, where you'll put code "8" (if this were a Roth IRA, you would have to add a second code, "J").

On a subsequent screen you'll be asked to make an explanation and you can write "Return of xxxx excess contribution plus xxx earnings."

The gross distribution amount (contribution + earnings) will carry to box 15a of the 1040, and the earnings amount will be shown in box 15b (as taxable). [edited 4/5/17]

[jtgriff01]

The earnings were not received until 2017 so does not make sense to report them for 2016 -- can this be correct?

[lbkilbride]

If you do this it adds it to line 15a

[ThomasM]

Yes, sorry, 15a will show the gross distribution amount (contribution + earnings).

[budda]

Same issue  2016 over  contribution to traditional IRA.  Withdrew the excess immediately.  Correct amount of contribution entered in 2016 Turbo Tax and tax return.  Just received from broker a 2016 form 5498 Ira Contribution Info.  Checked my Broker statement and shows the initial total amount as a  contribution and the (correction) withdrawal as a withdrawal .  Will I be penalized on both??

[budda]

Same issue  2016 over  contribution to traditional IRA.  Withdrew the excess immediately.  Correct amount of contribution entered in 2016 Turbo Tax and tax return.  Just received from broker a 2016 form 5498 Ira Contribution Info.  Checked my Broker statement and shows the initial amount as a  contribution and the correction withdrawal as a withdrawal .  Will I be penalized on both??

[macuser_22]

@budda  - A withdrawal should be reported on a 1099-R form  Did you receive a 1099-R?   What code is in box 7?
If you did not receive a 1099-R, then contact the broker to find out what happened to it and get a replacement.  You need the box 7 codes to properly report it.     There is no penalty if you removed the excess before the due date unless you had any taxable earnings subject to an early distribution penalty.

[patadams04]

this makes no sense.  If the excess TRADITIONAL IRA contribution, made in 2017, is withdrawn  in March 2018, the 1099-R will reflect the earnings received in 2018.  If I make a 1099-R now, the earnings are added to my 2017 taxes 1040 line 15b, as income in 2017.  I think it makes much more sense to show NO contribution in 2017, and then pay the taxes on the earnings with the 2018 taxes (when they were received).  Please clarify again, thank you.

[macuser_22]

@patadams04   A 2017 excess contribution *for* 2017 removed before the 2017 due date *in* 2018 is a 2017 contribution and any earnings are reported *in* the tax year that the contribution was *for*, not the year withdrawn.

IRS Pub 590A <a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p590a#en_US_2017_publink1000230879">https://www.irs.gov/publication...>
"How to treat withdrawn interest or other income.
You must include in your gross income the interest or other income that was earned on the excess contribution. Report it on your return for the year in which the excess contribution was made."

[Sue3]

Hello - I am in the same situation and said I am entering the 1099-R myself (since I wont get the one from broker till 2019).However, they ask for an explaination on how I tried to obtain a 1099-R. any suggestions?

[Sue3]

Hello - I am in the same situation and said I am entering the 1099-R myself (since I wont get the one from broker till 2019).However, they ask for an explaination on how I tried to obtain a 1099-R. any suggestions?

[Sue3]

Hello - I am in the same situation and said I am entering the 1099-R myself (since I wont get the one from broker till 2019).However, they ask for an explaination on how I tried to obtain a 1099-R. any suggestions?

[Sue3]

Do I need to fill a 4852? note that its not like I havent received a 1099 or my 1099 is wrong - I just dont expect to receive it till 2019.

[Sue3]

Do I need to fill a 4852? note that its not like I havent received a 1099 or my 1099 is wrong - I just dont expect to receive it till 2019.