Excess Roth IRA contribution and 1099R with code PJ

Forum|Forum|2 years ago
March 20, 2024
4 replies
56 views

My story is a little complicated. I accidentally recharacterized $6000 from Trad to Roth IRA in 2021 and found out about that only in 2023. So I amended my tax return for 2021 and paid 6% penalty on excess contributions for each year 2021 and 2022.

I requested the withdrawal of excess contributions from Roth IRA later in 2023. The investment of $6000 had lost its value to 5400 and it was withdrawn from the brokerage. I additionally took $ 600 distribution from Roth IRA so that a total of $6000 would be removed from the Roth IRA and I would not have to pay any more penalties for 2023.

I received two 1099R this year; one with $600 in box 1 and code J and other with 5400 in box 1 and code PJ . Here is the problem; when I upload both 1099R TurboTax generates 5329 with only 600 removed from excess contribution and is asking to pay fine on remaining 5400. How do I fix this?

Thanks in advance.

TurboTax Premier Online

fanfare

Level 15

"I requested the withdrawal of excess contributions "

This is the wrong action. Custodian should have refused it.

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after tax due date including extensions: you distribute the excess amount being carried forward on 5329,
(or offset it with currently allowed contribution) .
Earnings stay in the Roth account.

Taking out an additional $600 was also an error.

you now have an early distribution from your Roth IRA.

It may be non-taxable if you still have basis in Roth contributions or conversions.

Yout are not answering the questions correctly about what you did or tried to do.

@monstera13

fanfare

Level 15

TurboTax won't apply a "P"1099-R to your current tax return.

You should tell TurboTax you had a prior excess of $6,000 and you took out $6,000.

That will give the desired result but ignoring any tax consequence of the other 1099-R.

@monstera13

monstera13Author

Level 2

Thanks for your input. The custodian didn’t have any issue with withdrawing excess contribution. Anyway additional $600 was withdrawn to make the total amount withdrawn to $6000 so that I wouldn’t have to pay 6% penalty on excess contribution.

I can get it fixed if I manually put in for 1099R with total of $6000 in box 1 and distribution code J instead of PJ. Is that the way to go ?