Excess contributions on Roth IRA in prior year

[Kimmik72]

In early 2024 I realized we had contributed too much to our Roth IRA in 2022 and 2023.  We withdrew these excess contributions in January 2024 and received a 1099-R for each of the two separate year’s withdrawals.  Both 1099-R forms are for 2023.

On our 2023 taxes the total of these two excess contributions was entered on line 18 of form 5329, and turbo tax placed the same amount on lines 22 & 24 of form 5329.  We had an additional tax amount on line 25, which was paid with our 2023 bill.  The excess contributions were withdrawn from our account no longer remains there.

Now doing our 2024 taxes Turbo Tax is calculating that we owe this amount again, but we do not as the excess contributions were withdrawn from our account in January 2024.  I was not given the opportunity to enter anywhere that we had withdrawn these contributions at any time while going through turbo tax in 2023.

I am not sure how to correct this.  Here are my questions:

1. Do the 2023 excess contributions need to be reported at all since they were withdrawn before the 2023 filing deadline of 4/15/2024?

2.  If not do I amend my 2023 return and exclude the 2023 contribution withdrawal amount?

3.  What do I need to do to get this off my 2024 return since we have already paid the penalty AND the excess contributions were withdrawn from our Roth IRA.

4. Since the remaining excess contributions belong to 2022, but were not withdrawn until 2024, does there need to be an amendment to my 2022 return?

[DanaB27]

1. No, you do not need to report the 2023 excess contribution since you requested the withdrawal of excess contribution plus earnings before the due date. You should not have the 6% penalty on this amount. You should have a 2024 Form 1099-R with code P and J for the return of excess contributions plus earnings.

2. Yes, you will need to amend the 2023 return to report the earnings from box 2a of the 2024 Form 1099-R with code P and J. On your 2023 return:

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Enter Form 1099-R
4. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
5. Click "Continue" after all 1099-R are entered and answer all the questions.
6. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.

Also make sure you indicate in the IRA contribution interview that you withdrew the excess contribution by the due date. On your 2023 return:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Enter the Roth IRA contribution
5. On the "Do you have any Excess Roth Contributions" answer "Yes"
6. On the "Enter Excess Contributions" screen enter the total excess contribution from 2022
7. Continue until the penalty screen and enter the 2023 excess contribution amount as withdrawn.

3. Entering the Form 1099-R with code J will resolve the 2022 excess on your 2024 return:

1. Click on "Search" on the top and type “1099-R” 
2. Click on “Jump to 1099-R” and enter Form 1099-R with code J
3. Click "Continue" on the "Review your 1099-R info" screen
4. Answer all the questions and make sure you enter the net contributions prior to 2024 on the "Enter Prior Year Roth IRA Contributions" screen (include the 2022 excess contribution but not the 2023 excess contribution)
5. On the "Do you have any Excess Roth Contributions" answer "Yes"
6. On the "Enter Excess Contributions" screen enter the total excess contribution from 2022.

4. You should have a 2024 Form 1099-R with code J for the return of the 2022 excess contribution without earnings since it was removed after the due. You will need to pay the 6% penalty on this excess contribution on your 2022 and 2023 returns. If you did not then you will need to amend the 2022 return.

Please see How do I amend my federal tax return for a prior year?

[Kimmik72]

Thank you for your response. 

I don't have a 2024 1099-R form.  I received two 2023 1099-R forms, for the two separate withdrawals - one relating to 2022 contributions, and one relating to the 2023 contributions.  I mistakenly reported both of these on my 2023 tax return and paid 6% penalty on both.  Where my Roth is held shows that I have no tax documents for 2024.

So given this, should I be amending my 2022 return or my 2023 return for the withdrawal of the 2022 contributions and penalty payment?

I know I need to amend 2023 because I paid too much in penalties, I'm just unclear on where to report the excess contributions for 2022 - amend 2022 and report there and amend 2023 and report none, or amend only 2023 and report 2022?

[DanaB27]

To clarify, you received these Form 1099-Rs in the beginning of 2025 or in 2024? You stated you removed the excess in January of 2024. If this is correct then your financial institution should have used a 2024 Form 1099-R. Maybe you meant in January 2023?

What are the codes in box 7 of your Form 1099-Rs? 

If you removed the 2022 excess before the due date of the 2022 return then you shouldn't pay the 6% penalty on the 2022 and 2023 returns.

if you removed the 2023 excess in 2023 then you do not have to pay the 6% penalty.

You will have to amend the 2022 and 2023 returns to remove the penalty.

On your 2022 return:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Enter the Roth IRA contribution
5. Continue until the penalty screen and enter the excess contribution amount withdrawn.

On your 2023 return:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. On the "Enter Excess Contributions" screen delete the entry.

[Kimmik72]

Clarifying:

I had excess contributions in 2022 and then some in 2023.  I realized this in early 2023 and the excess contributions for both years were withdrawn from my account  in April 2023.  I received the 1099-Rs in 2024 and they are both 2023 1099-R forms - one each for the contributions relating to 2022 and 2023.  There was a small loss on the 2022 excess contributions.

Codes for 2022 distribution are J, P

Codes for 2023 distribution are 8, J

 - there is also a small taxable amount on this 1099-R

 - the 2023 excess contributions were removed prior to 4/15/2024

I mistakenly included the 2023 distribution on my 2023 return, so I believe I need to amend this to remove that distribution.

I *think* I need to just amend my 2023 return to remove this distribution and leave the 2022 distribution on my 2023 return and pay the penalty only on that amount.  I need to make sure that this doesn't carryover to the 2024 return.

[Kimmik72]

Also, when I am in TurboTax I do not see "jump to IRA contributions" when I type "IRA contributions" in search.  I can't seem to get to where I need to change the data I had previously entered.

[Kimmik72]

Something else I noticed last night when trying to amend 2023 - TurboTax is asking for all this information under "Traditional & Roth IRA Contributions".  There is no 1099-R for this under "IRA, 401(k), Pension Plan Withdrawals (1099-R)" - so when I originally did this return I didn't enter the IRA 1099-R under that section.  

Do I need to add it there also?

[DanaB27]

Yes, you will need to add the 2023 Form 1099-R with code 8 and J on your 2023 return.

You do not need to pay the 6% penalty on your 2023 return since you removed the excess contribution before the due date. Please remove the contribution in the IRA contribution interview or enter on the penalty screen that you removed the excess by the due date.

You do not need to pay the 6% penalty on your 2022 return since you removed the excess contribution before the due date. If you show a 6% penalty on your 2022 return then you will have to amend your 2022 return.

Since you had no earnings on your 2023 From 1099-R with code P and J you do not need to amend your 2022 return to add it.