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REF904
Returning Member

Excess Roth IRA Contributions from 2017 and 2018 not distributed until 2019, after the tax deadline

I made excess contributions to a Roth IRA in 2017 and 2018 but didn't realize it until 2019 after the tax deadline.  The 1099-R has a code "J" which is for early distribution which makes the full distribution taxable.  I read that if the distributions were after the tax deadline to remove them, then not to remove the earnings so I didn't.   I believe the distributions should not be taxed but the earnings should've been withdrawn so I could pay the tax and penalty on them.   Is this correct?  How do I record the distribution so that Turbo won't tax the distribution?

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Accepted Solutions
macuser_22
Level 15

Excess Roth IRA Contributions from 2017 and 2018 not distributed until 2019, after the tax deadline

No.  Not the earnings, only the excess because it was not removed within the time limit for 2017, however, you need to amend 2017 and 2018 to pay the 6% penalty (on form 5329) for not removing that excess within the time limits for those years.  The 6% penalty repeats each year that the excess is in the account so you owe it for both years.

 

The 2019 distribution will not be taxable because you are only removing your own prior contributions.   TurboTax 1099-R interview for a code J asks for prior years contributions not previously removed.

 

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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1 Reply
macuser_22
Level 15

Excess Roth IRA Contributions from 2017 and 2018 not distributed until 2019, after the tax deadline

No.  Not the earnings, only the excess because it was not removed within the time limit for 2017, however, you need to amend 2017 and 2018 to pay the 6% penalty (on form 5329) for not removing that excess within the time limits for those years.  The 6% penalty repeats each year that the excess is in the account so you owe it for both years.

 

The 2019 distribution will not be taxable because you are only removing your own prior contributions.   TurboTax 1099-R interview for a code J asks for prior years contributions not previously removed.

 

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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