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helmanenterprise

Level 2

Solved

I took out a distribution and returned a portion. Now program shows traditional excess contributions with penalty if not withcrawn?/?

Forum|Forum|3 months ago
February 23, 2026
1 reply
0 views

I took out $550K for a business venture and found I did not need it all so I returned $200K into my IRA before the 60 day rule. Now I'm showing traditional excess contributions of $192,000 and it says to avoid a penalty I can withdraw these excess contributions before the due date of the return. Other option is if I had withdrawn all or some of these contributions to enter that amount. I don't understand what these excesses are or what to do to avoid a penalty and I don't want to take out more money.

IRA

Best answer by Opus 17

Expert Reviewed

Don't enter the return as a contribution, it is not a contribution.

Instead, when you enter the 1099-R for the withdrawal, there will be a screen that says something like "Let's look for ways to lower your taxes" and one of the options will be a rollover. Indicate that you did a partial rollover of $200,000 (a return to the same IRA or a rollover to a different IRA are both considered rollovers.)

Answer

Level 15

Expert Reviewed

Don't enter the return as a contribution, it is not a contribution.

Instead, when you enter the 1099-R for the withdrawal, there will be a screen that says something like "Let's look for ways to lower your taxes" and one of the options will be a rollover. Indicate that you did a partial rollover of $200,000 (a return to the same IRA or a rollover to a different IRA are both considered rollovers.)