overcontribution to Traditional IRA in 2023

[FuryJD]

since this forum got all sorts of whacky when i approved the answer:

My original question was with regards to a Traditional IRA from 2023 that was not caught in time in 2024.

I asked if 2023 end result was to pay 6%, and asked if 2024 was the year i needed to fill out the 1099-R manually, or if i should be waiting.  If manual, what options.  I may have also asked if the 6% applied to 2024 at some point, but no longer recall.  The excess was removed before the deadline if it had occured in 2024, but because it occured in 2023 it goes year to year, so the 6% applies again.

The answer given that was marked as best answer was helpful to my situation, and i hope with this post re-instated that it helps someone else down the road get the answers they need as well.

[FuryJD]

ignore - forum wackiness

[DanaB27 · Accepted solution]

1) Yes, you will enter the Traditional IRA contribution in the IRA contribution interview under Deductions & Credits and TurboTax will fill out 2023 Form 5329 and calculate the 6% penalty on the excess contribution.

2) You should have requested return of contribution without earnings since it was after the 2023 due date. You will get a 2025 Form 1099-R with 2a blank and report it on your 2025 return. Please see Return of Excess Traditional IRA Contributions for additional information.

Yes, you will need to pay the 6% penalty on your 2024 return since the excess wasn't removed by December 31, 2024.

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “traditional IRA”
4. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
5. Enter the amount you contributed
6. On the "Do you have any Excess Traditional IRA Contributions" answer "Yes"
7. On the "Enter Excess Contributions" screen enter the 2023 excess contribution amount

Next year on your 2025 return enter the 2025 Form 1099-R and then go to the IRA contribution interview:

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “traditional IRA”
4. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
5. Enter the amount you contributed
6. On the "Do you have any Excess Traditional IRA Contributions" answer "Yes"
7. On the "Enter Excess Contributions" screen enter the 2023 excess contribution amount
8. Say 'Yes" to "Contribution amount Withdrawn"
9. Enter the amount withdrawn on ethe "Enter Amount Withdrawn" screen
10. Say "Yes" on the next screen that this was reported on Form 1099-R

[FuryJD]

@DanaB27 

Thank you for your assistance.

2023: I understand this and have no further issues.

2024: I understand this and have no further issues, i think i got confused by the step-by-step telling me i had until the deadline this year to avoid the 6%, but in reality that applies to the first year it happened based on what you've said.

2025: I will likely get a form and not have any issues with this, but can always seek advice (albeit earlier) next year.

My one remaining question would be in 2) you linked an article.  I assumed that because i was up against the max, that earnings would count against me, it sounds like via the article it would not have met the criteria?  Is there something to be done now with it, or it now is what it is?

I do appreciate you taking the time out of your day to help me and others (as well as the rest of the folks here).

[DanaB27]

You removed the Traditional IRA contribution after the 2023 due date therefore you do not need to remove the earnings. You can ignore the earnings. You do not need to do anything else.

[FuryJD]

Thank you for your assistance