I changed jobs in 2019 and went over the income limit to qualify funding my Roth IRA. What can I do in 2020 so I do not get a penalty?

posted

You can withdraw the excess contribution and any earnings on the excess contribution before your file your return and report that you have withdrawn the excess in TurboTax. By doing this you will not be charged the penalty.

If you know the amount of the earnings you can add a substitute 1099-R to your return for this year so you do not need to amend your 2019 tax return. You use code J and P then when you receive the 1099-R in 2020 you do not need to report it on your return.

You will be taxed on the earnings made on the excess contribution and receive a 10% on the amount for the early withdrawal.

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