How to enter form 5329?

[jayfoster]

I made an excess contribution to my Roth IRA in year 2023.  I withdrew the excess contribution before the filing date for the 2023 taxes, so owe no penalty.  Turbo tax noted this just fine.

However, I also need to enter the earnings on that withdrawn 2023 contribution on my 2023 tax return (form 5329), but Turbo tax does not allow me to do that.

How do I enter the earnings from a withdrawn excess contribution?

[DanaB27 · Accepted solution]

You will get a 2024 Form 1099-R  in 2025 with codes P and J for the withdrawal of the 2023 excess contributions and earnings (removed in 2024). This 1099-R will have to be included on your 2023 tax return and you have two options:  

• You can wait until you receive the 2024 Form 1099-R in 2025 and amend your 2023 return or
• You can report it now in your 2023 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2024 Form 1099-R into the 2024 tax return since the withholdings are reported in the year that the tax was withheld. The 2024 code P will not do anything to the 2024 tax return income but the withholdings will be applied to 2024.

To create a Form 1099-R in your 2023 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2023?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
11. Click "Continue" after all 1099-R are entered and answer all the questions.
12. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2022" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2023.

Please be aware, that you do not have to pay the 10% early withdrawal penalty on the earnings due to tax law changes. TurboTax will fill out Form 5329 for the exception.

[jayfoster]

For step 12, what amount am I entering?  The total returned excess contribution + earnings? The returned excess contribution?  The returned earnings?

[jayfoster]

Okay, you stated the amount of earnings.

Now I have an incomplete 1099-R form.  It wants the federal identification number for the payer.  Where can I find that, since I don't have a real 1099-R form?

[jayfoster]

I was able to locate the payee federal ID and address information from the brokerage web site.