Financial planner withdrew $10K from Roth IRA-owned for 5+ years. Box 7 reported to IRS as early distribution. How to get around penalty in turbo tax??

[macuser_22 · Accepted solution]

Only you cac withdraw from a IRA, not your financial planner.  Any withdraw in excess of your own previous contributions not already withdrawn are subject to the penalty if under age 59 1/2.

You can always withdraw your own Roth contributions tax and penalty free.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

One of the followup questions will ask for your prior year contributions not previously withdrawn. Those contributions that still remain in the Roth will not be taxed or subject to a early withdrawal penalty. That will add a 8606 form to your tax return with the Roth contribution and tax calculation in part III.

[Critter]

After you enter the 1099-R you must continue thru all the following screens to determine if there is any tax or penalty on the distribution.