Exceesive Roth Contribution

[user17730023183]

Married filing jointly for 2025.   I have excess Roth Ira contribution of 15,000.  Can I withdrawal 15,000 from my Roth Ira before April 2026 to correct it on my 2025 tax return?  How can I enter the withdrawal in turbo tax to avoid the penalty? 

[AnnetteB6]

Yes, you can remove the excess Roth IRA contributions, plus earnings, before the due date of your return to avoid the penalty.  

Since you made the excess contribution for 2025 and will withdraw the 2025 excess Roth IRA contribution plus earnings in 2026 before the due date, then you will get a 2026 Form 1099-R in 2027 which should have codes P and J.  This 1099-R will have to be included on your 2025 tax return and you have two options:  

• Amend your 2025 return after you actually have your 2026 Form 1099-R in hand. 

OR

• You can report it now in your 2025 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 2026 Form 1099-R into the 2026 tax return since the withholdings are reported in the year that the tax was withheld.  The 2026 code P will not do anything to the 2026 tax return income but the withholdings will be applied to 2026.

If you wish to report the Form 1099-R now as part of your 2025 return without amending it later, go to the use these steps:  

• Go to Wages and Income > Retirement Plans and Social Security > Form 1099-R section of your return to add a Form 1099-R
• Select "I'll type it in myself"
• Box 1 enter total distribution (contribution plus earning)
• Box 2a enter the earnings
• Box 7 enter J and P
• Click "Continue"
• On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
• On the "Which year on Form 1099-R" screen say that this is a 2026 Form 1099-R.
• Click "Continue" after all 1099-R are entered and answer all the questions.
• 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".

See the following TurboTax help article for more information:

What if I made an excess Roth IRA contribution because my income is too high?
 

[user17730023183]

After following the instructions and adding the 2026 1099-R.  I still see in TurboTax on the IRA Contribution Results page  'Tax to excess contribution'  of $900.  How can I remove the $900 tax applied to my excess contribution that I reverted?

[Opus 17]

Do you have any excess contributions?  There is something wrong with the question.

Normally, you can't contribute more than $7000 to any IRA (or $8000 if over age 50).  There are no joint IRAs, so a spouse can have a separate IRA, but the IRA provider should not let you even try to deposit more than $8000 per spouse.

Remember that a workplace retirement plan is NOT an IRA.  If you have a workplace account like a 401k or 403b, even if it is a Roth, it is ONLY captured from your W-2.  When the program asks for IRA contributions, you only enter direct contributions you made to a private IRA.  You do not list your workplace contributions again.  

Also, you can only contribute to any IRA (traditional or Roth) if you have compensation from working.  This is normally self-employment from schedule C, or your W-2 box 1 wages.  If you don't have compensation, you can't contribute and all contributions will be excess.  And if you enter your contributions before you enter your job income, it will show as excess but that will go away when you enter your income.

Can you start by confirming

1. whether or not you have compensation reported on your W-2 or schedule C?

2. did you actually make IRA contributions or only workplace plans?

3. If you have both a workplace plan and an IRA, did you only enter the IRA?

4. did you enter your IRA and your spouse's IRA separately?

[user17730023183]

My wife an I contributed to our Roth IRA in 2025 but our AGI is over the limit.  So I did what was suggested in the reply to my original question.  I withdrew the excessive contribution from each of our accounts totaling $15,000 plus the earnings.  I entered the 20261099-R as instructed since I have not filed yet using J and P in Box 7.  I thought if I did this then the 6% excessive penalty would be removed and I would only pay taxes on the earnings plus an early withdrawal penalty.   I see the taxes on the earnings but I also have the $900 ($15,000 * 6%) of excess contribution penalty.  I am trying to understand why TurboTax is calculating the penalty if I entered the the withdrawal 1099-R before filing my 2025 taxes.

[Opus 17]

OK, thanks.  When turbotax tells you that you have an excess contribution (it should tell you this twice, once for each IRA) it should also ask you a question like "Will you remove this excess before the tax deadline?"  If you say yes, it should clear the excess from form 5329.  Is it possible you skipped this question when you first entered the contributions because you were trying to decide what to do?  Try going back through the IRA interview and see if you get that question now.  (You have to report the contribution since you made it, then note the removal.  You can't just say you contributed zero.)

If that doesn't work you might need to change your contributions to zero, and delete the two "imaginary" 1099-R with code PJs. .  Then exit, restart, and go to the tax tools menu and delete form 5329-T and 5329-S if they are there.  Then exit, restart, and enter the IRA contributions again and answer the removal question.

If that doesn't work, you may need to call support so they can do a screen share with you and look at the internal worksheets and fix something for you.