Overcontribute SEP IRA with profit

[Charles-Montgomery]

I overcontributed to my SEP IRA by $600 and I am showing a profit of that contribution of $100. The platform managing that account says that I should withdraw $700 from the account and withhold 10% for federal taxes, which I plan to do. After I make this withdrawal, should I update my SEP contribution in TurboTax to be the amount I contributed less the amount I withdraw, or should I leave the amount I contributed to my SEP as the full amount I contributed before the withdrawal?

[Charles-Montgomery]

To clarify my question, if I withdraw my excess contribution and earnings before I file my taxes, should I indicate on my taxes that I contributed the original amount less the withdrawal (so never mention the withdrawal), or still say that I contributed the full amount?

[Charles-Montgomery]

@VolvoGirl since you were able to help with my last question, tagging you in case you can help here as well

[VolvoGirl]

Sorry I can't help but maybe @dmertz can.

[dmertz · Accepted solution]

You would report a SEP contribution $600 less than originally deposited.  The $600 of contribution returned is treated as never having been contributed.

Note that if the SEP contribution fro 2023 was made in 2024 and you expect to be able to contribute at least $600 to a SEP IRA for 2024, you could just leave the $600 in and treat that $600 as part of the SEP contribution for 2024.  It's your responsibility to track the year for which particular contributions are made.  The SEP IRA custodian only tracks the year in which a SEP contribution is made, not the year for which a SEP contribution is made.  Of course if the $600 contribution was made in 2023 for 2023, you'll have to remove it since it can't be treated as a contribution for 2024 if it was contributed before 2024.

[VolvoGirl]

 @dmertz can you make heads or tails on this post?

https://ttlc.intuit.com/community/taxes/discussion/different-tax-rates-for-pensions-on-the-same-join... 

[Charles-Montgomery]

@dmertz and @VolvoGirl thank you both for your help