Excess contribution IRA

[ryan79]

Hello,

I am trying to figure out how to file my excess contribution on my ROTH IRA account. I have seen other posts on here about excess contribution to their IRA but I am still a bit confused in my situation.

On 11-29-2018 I deposited $5500 into my ROTH IRA

on 1-15-2020 I withdrew $3600 because I didn't know about the Maximum Modified AGI amount. I calculated that I had over contributed $3600 based on my Maximum Modified AGI for 2018. The extra $1900 stayed in the IRA as a contribution.

I received the 1099-R form this year showing that I had a gross distribution of $3600 with box 2b checked "Taxable amount not determined". Also Distribution code J(early distribution) is entered.

I would like to just pay the 6% tax on the $3600 that I had in excess for the year of 2019. This is where I am not understanding how to do this.  The 1099-R form I received shows 2020. Should/Can I report this on my 2020 Tax Form or do I need to amend my 2019 form?  I tried reporting it on my 2020 taxes and entered in the $3600 as excess contribution but it doesn't seem to change anything for my federal taxes. It never specifically says anything about the 6% either.  Any help would be appreciated.

Thank you for your help,

Ryan

[macuser_22]

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@ryan79 wrote:

Hello,

I am trying to figure out how to file my excess contribution on my ROTH IRA account. I have seen other posts on here about excess contribution to their IRA but I am still a bit confused in my situation.

On 11-29-2018 I deposited $5500 into my ROTH IRA

on 1-15-2020 I withdrew $3600 because I didn't know about the Maximum Modified AGI amount. I calculated that I had over contributed $3600 based on my Maximum Modified AGI for 2018. The extra $1900 stayed in the IRA as a contribution.

I received the 1099-R form this year showing that I had a gross distribution of $3600 with box 2b checked "Taxable amount not determined". Also Distribution code J(early distribution) is entered.

I would like to just pay the 6% tax on the $3600 that I had in excess for the year of 2019. This is where I am not understanding how to do this.  The 1099-R form I received shows 2020. Should/Can I report this on my 2020 Tax Form or do I need to amend my 2019 form?  I tried reporting it on my 2020 taxes and entered in the $3600 as excess contribution but it doesn't seem to change anything for my federal taxes. It never specifically says anything about the 6% either.  Any help would be appreciated.

Thank you for your help,

Ryan

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You must:

1) Report the 2020 1099-R on your 2020 tax return.  Since it is your contribution being removed it will not be taxable.  When the interview asks for prior contributions enter it.

2) You must amend 2018 and indicate a excess 2018 contribution on a 2018 5328 and pay a 2018 6% penalty.

3) Since the money was still an excess at the end of 2019.  You must amend 2019 and indicate a 2019 excess  contribution on a 2019 5329 and pay another 2019 6% penalty.

For #2 & 3 enter the excess in the IRA contribution interview.  Bypass the first new contribution questions and it will ask about prior excess.

[ryan79]

Thank you for the quick response macuser_22! 

I understand I need to ammend both my 2018 and 2019 with the $3600 excess contribution. I know where to ammend the tax return on turbo tax but I am not clear on where to go to enter the excess. I don't report this 2020 1099-R form on there correct?

Thank you,

Ryan

[macuser_22]

You report the actual distribution with the 2020 1099-R code J on your 2020 tax return.

For 2018:

Enter the 2018 Roth contribution in the IRA contribution interview and TurboTax will calculate how much was an excess and add the 5329 form.

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.

For 2019 same interview but not new contribution, just click through the interview until you get the prior years excess question.

[ryan79]

Thank you macuser_22.

I figured out the 2018 year but not really understanding the 2019. You state not to start a new contribution but I am not sure where to go for this. I am in the Retirment and Investments section but I must choose Traditional and Roth IRA Contributions, Retirement Savings Contribution Credit, Investment Interest Expenses, or Other Investment Expenses. Not sure how to get to the part where it asks about prior years excess question. Any ideas?

Thanks,

Ryan

[macuser_22]

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@ryan79 wrote:

Thank you macuser_22.

I figured out the 2018 year but not really understanding the 2019. You state not to start a new contribution but I am not sure where to go for this. I am in the Retirment and Investments section but I must choose Traditional and Roth IRA Contributions, Retirement Savings Contribution Credit, Investment Interest Expenses, or Other Investment Expenses. Not sure how to get to the part where it asks about prior years excess question. Any ideas?

Thanks,

Ryan

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Say yes you had a 2019 contribution but leave the amount box blank and continue until the get the prior year excess questions.  Enter  the amount and then indicate that it was not removed and not applied as a 2019 contribution.

[ryan79]

Hi macuser_22,

I think I have it figured out now. Thank you for your help with this. This was really causing me some headaches but i feel more comfortable now.

I did have one question that came to mind while I was doing this. I had excess contribution in 2019 as well where I deposited $6000 on 1-4-2019 and then withdrew $3000 in excess  on 3-16-2020. I received a 2020 1099-R form for this as well which shows $3379.98 in box 1 and taxable amount of $379.98 in box 2a. Box 7 has PJ. I assume I need to file this other 1099-R form on my 2020 taxes but also amend my 2019 taxes since the contribution was in the year of 2019?

Thanks.

Ryan