I keep getting transferred (or getting bad information) when I call the bank. THEY have the information that shows that I’ve had it for 24 years, and the distribution was all principal. So why not put that on the 1099-R? Everything I’ve read has said that you can withdraw principal penalty free— regardless of age. Help! Thanks!
In the instance where you are taking a distribution of Roth principal, the tax-free status is indicated on the Form 1099-R by the Code Q in Box 7, or perhaps Code B.
Is your distribution showing in TurboTax as taxable? Is this on the Income Summary page or on your actual Form 1040? If on the Income Summary page, that is just for display showing it was entered, and does NOT make it taxable on your return.
If you're using TurboTax Online, in the left-side menu, go to Tax Tools > Tools > View Tax Summary, then back to left-side menu for Preview My 1040 to verify that it is not showing as taxable on Line 4b.
Here's more info on Codes in Box 7 and Roth Distributions.
Because all Roth IRAs that you might have are treated as one combined Roth IRA for tax purposes, a Roth IRA custodian has no way to know if a nonqualified Roth IRA distribution (code J or sometimes code T) is taxable or not. The taxable amount must be determined on your tax return.
You must click the Continue button on the page that lists the Forms 1099-R that you have entered into TurboTax, then answer the questions that follow, particularly any question asking if you had a Roth IRA prior to 2019 and any questions asking about your basis in Roth IRA contributions and conversions. TurboTax will used the answers to these questions combined with the amount of the Roth IRA distribution to determine the taxable amount of the distribution.
(MarilynG1, code B has nothing to do with Roth IRAs.)