Excess Contributions - Contributions Withdrawn Before Due Date (for Roth IRA)

[User1001]

I made an excess contribution into my Roth IRA and withdrew it after TurboTax informed me of the excess.  In TurboTax on the screen that says 'Contributions Withdrawn Before Due Date', should I enter the total amount of the excess + earnings? For example, if my excess contribution amount was $1000 and the total applicable earnings or loss was $100.  Should I enter $1100  in TurboTax?

[MinhT1 · Accepted solution]

If you withdrew your 2024 excess contribution to your Roth IRA before the due date of the 2024 tax return (April 15, 2025), make sure that you also withdraw the related earnings.

On your 2024 tax return, you do not report the excess contribution as it has been withdrawn. The earnings have to reported and taxed in 2024.

For this, you would create a 2025 form 1099-R with the total distribution (excess plus earnings) in box 1, the earnings in box 2a and code PJ in box 7. You then enter this 1099-R on your tax return, and the earnings will be taxed. When entering this form 1099-R, make sure to indicate that the year on the form is 2025, as this is a replica of the form you will receive for year 2025 in 2026.

If there is a loss, that loss is not deductible.

When you receive the 2025 form 1099-R with code PJ in box 7 (in 2026) for this withdrawal, there is no further action needed.

[Edited 02/19/25 | 8:25 AM PST]

@User1001

[fanfare]

DId you file the "excess plus earnings" form with custodian.?

If NO, your action is incorrect and will not result in the expected 1099-R

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allocable earnings do not go on Misc Income.

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allocable earnings:

 positive earnings allocable to the excess are included in income on 1040 Line 4b for the year of the contribution. negative earnings are ignored; in any case, for purposes of basis, consider the original contribution amount as returned.

["Include the earnings in income for the year in which you made the contributions, not the year in
which you withdraw them."

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Genrally this is done in TurboTax by fabricating the 1099-R you expect later and entering it now.

@User1001 

[User1001]

I filled out a form with the company that handles my Roth IRA for the excess amount and they determined the earnings on that amount then sent a letter saying they will be sending a check to me for the excess plus the earnings.