Excess Roth IRA Contribution - Prior Year Tax Amendment Required?

[STT4]

In 2023, I contributed $5K to my Fidelity Roth IRA.  In January 2024, I realized while preparing my 2023 taxes in TurboTax that my $5K contribution exceeded IRS rules.  I immediately made an Excess Contribution Withdrawal of funds ($5,202.33) to cash prior to submitting my 2023 tax return.  I received a 1099-R from Fidelity for tax year 2024 in the amount of $5,202.33 ($5K Gross Distribution + $202.33 Taxable amount, with Distribution Codes PJ).  I am including the 2024 1099-R in my 2024 tax return.  

Am I required to submit a 2023 tax amendment as well given I am including the $202.33 Taxable amount on my 2024 return?  If I am required to submit a 2023 tax amendment, how do I go about doing this in Intuit TurboTax, which is the product I have used for years?

[MaryK4]

Yes, you will need to amend your 2023 return- if you withdraw a contribution to your Roth IRA, you must include the earnings on the contributions in income for the year in which you made the contributions.  You can amend the 2023 return (see How do I amend my federal tax return for a prior year?).  You can add the 2024 1099-R and TurboTax will ask you what year the 1099-R has on it.  If you indicate 2024, it will add the income to the 2023 return.  @STT4 

[Edited 02/09/25| 2:11 pm PST]

[dmertz]

If you did not include the $202.33 on your 2023 tax return, you must amend.  When preparing the amendment  in 2023 TurboTax, entering the code-PJ 2023 Form 1099-R and indicating that the form is a 2024 form, 2023 TurboTax will include the $202.33 as an increase to your 2023 taxable income and will calculate the additional tax due.

Entering this Form 1099-R into 2024 TurboTax will cause 2024 TurboTax to remind you that the taxable amount was reportable on your 2023 tax return.  Only if the form shows tax withholding will 2024 TurboTax do anything else with the information on this form.  Tax withholding always applies to the year of the form despite the income in this case being taxable on the previous year's tax return.

[STT4]

Is there a minimum dollar amount from IRS.gov for a tax amendment?

In 2023, I paid $300 (6% extra tax on excessive IRA Roth withdrawal $5,000).  Am I still required to submit a 2023 amendment for the 2024 1099-R Fidelity Excess contribution $202.33 taxable amount?  

[dmertz · Accepted solution]

If it was $10 or less it would probably be considered to be a de minimis error.  $202.33 is substantially more than that.

Since you corrected the excess timely, you are not subject to the $300 excess contribution penalty.  Your amendment needs to include a corrected Form 5329 Part IV showing zeros where there were previously nonzero amounts.  That combined with the reporting of the $202.33 of income will result in a refund of the difference between $300 and the additional income tax.  Your amendment needs to include "Filed pursuant to section 301.9100-2" as part of your explanation.

You'll also likely need to amend your state tax return for 2023 to add the $202.33.

[STT4]

Thank you for your help with my Excess IRA Withdrawal amendment!

I completed my 2023 amendment in TurboTax.  When printing the TurboTax documents it did not include:

Form 5329 to be mailed to IRS.  I am assuming I do not have to submit this form with my amendment since TurboTax did not. identify it?

Also, TurboTax did include form 8453 with box checked for Form 8949 (Sales & Other Dispositions of Capital Assets).  TurboTax did not print form 8949 in their amendment documentation for my use.  Do I need to do anything with form 8949?  If so, why did TurboTax not print it with my amendment?  

[dmertz]

TurboTax sees that there are no longer nonzero amounts on the From 5329, so it doesn't print it.  I really think that you need to include a Form 5329 with zeros replacing the original amounts so that you will be explicitly changing the original.  Absent that form, it seems that your original would be unchanged.  You'll need to prepare this Form 5329 manually since TurboTax won't do it for you.

[STT4]

Thank you!

Any thoughts on the Form 8949 form with this particular amendment?

[dmertz]

I don't know about that one.