Excess Roth IRA contributions since inception

[DanaB27]

Yes, this is correct. 

You can ignore that code P in the dropdown says "Return of contribution taxable  in 2023". When you answer in the follow-up question that this is a 2025 Form 1099-R TurboTax will know that it means  "Return of contribution taxable  in 2024".

[ETFtrader]

@DanaB27 

Thanks again for your help with my 2024 return. I am now in the process of doing our 2025 tax year return and was reviewing the 2025 1099-R's sent by the financial institution and noticed an issue compared to the 2025 1099-R that I filed in TurboTax last year. 

The 1099-R amount from the financial institution was $500 higher than the 1099-R I set up in TurboTax last year. It looks like either I made a mistake on the filing and now need to correct it or the financial institution sent an incorrect 1099. The $500 difference could be because there was a $500 excess Roth IRA contribution that was made in calendar year 2024 that related to the 2023 tax year that I did not catch for the 1099-R (but I did catch it in terms of the amendment that I filed for 2023). See details below.

How do I fix this in the 2025 tax filing? Do I need to amend the 2024 tax filing? Or is it possible that the financial institution made a mistake on their 1099-R? Can I just correct the 1099-R I filed last year somehow so that it matches the 1099-R from the financial institution?

Background info below.

Excess ROTH IRA contributions by tax year:
2021 = $6,000
2022 = $6,000
2023 = $6,500*
2024 = $7,000

*Includes $500 which was contributed in calendar year 2024, but related to tax year 2023

Last year I filed amendments for the excess contributions above as follows:
2021 = $6,000 reported on Form 5329 and 1040-X with Schedule 2 for additional taxes on $6,000 total excess contributions
2022 = $6,000 reported on Form 5329 and 1040-X with Schedule 2 for additional taxes on $12,000 total excess contributions
2023 = $6,500 reported on Form 5329 and 1040-X with Schedule 2 for additional taxes on $18,500 total excess contributions
2024 = $7,000 reported on 1040 line 4a an IRA distribution of $14,200 and 4b Taxable Amount of $7200 (earnings on excess contributions). Form 5329 line 1 was $7,200 and $18,500 reported on lines 18, 22 and 24.

For 2025 I received two 1099-R's from the financial institution:

1099-R #1: $18,000 in box 1, $0 in box 2A and box 7 has a code J.

1099-R #2: $14,700 in box 1 and $7,200 in box 2A and box 7 has code PJ.

For the 2024 tax return I created a form 2025 1099-R with gross distribution of $14,200 in box 1 and taxable amount in box 2a of $7200 . Line A5 was checked (indicating year 2025 form 1099-R).  The $14,200 consisted of the $7,000 excess contribution being a "Corrective Distributions made before due date of return" (code J) and $7,200 being taxable earnings (code P).  On Form 5329 line U was $7,200 for corrective distribution made before due date of return.

[DaveF1006]

Since you have already filed your 2024 return with the $14,200 figure, you have a slight mismatch with what the IRS has received from your bank. Here is the best way to handle it:

1. Amend the 2024 Tax Return

1. Yes, you should amend the 2024 return ($1040-X$). Because the "P" in Code PJ signifies that the earnings are taxable in the prior year (2024), the IRS expects the 1040 to match the 1099-R exactly. 
2. Update Line 4a (Total IRA Distributions) to $14,700.
3. Line 4b (Taxable Amount) remains $7,200 (assuming the earnings amount didn't change, just the return of the contribution).
4. Since the taxable amount didn't change, this amendment likely won't change your tax bill, but it prevents an automated "CP2000" notice from the IRS flagging the $500 discrepancy later.

2. Address the 2025 Filing

On your 2025 return (which you are doing now):

1. 1099-R #1 ($18,000, Code J): This is a 2025 event. Report this on your 2025 return. Since it is Code J (Roth distribution) and you are likely only taking out your basis (the excess from previous years), the taxable amount should be $0, but it must be reported to show you've cleared the excess. 
2. 1099-R #2 ($14,700, Code PJ): Even though you received this form in 2025, Code P means "Taxable in 2024." In TurboTax, when you enter this, the software should ask you "Which year is on this 1099-R?" and then tell you that it needs to be handled via an amended 2024 return.

[ETFtrader]

Thanks @DaveF1006 !!!

One more question, when I reported the excess Roth IRA contribution in Form 5329 last year  (2024 tax return) I used a value of $18,500 on lines 18, 22 and 24. I did that because I thought I should include all excess contributions made based on the tax year they related to, not based on the calendar year in which they were made. One of the contributions made in calendar year 2024 for $500 related to tax year 2023.

On the 1099-R #1 from the financial institution it shows $18,000 (code J and $0 taxable).  So there will be a mismatch between 1099 #1 and the 2024 Form 5329.  Did the financial institution mis-report the 1099 or did I make a mistake on Form 5329?

When I amend the 2024 return for the adjustment of  the 1099-R that you noted above, should I also revise the 2024 Form 5329 and show a value of $18,000 for lines 18, 22 and 24?

UPDATE: The $18,500 amount also appears on Form 5329 for the amendment I filed last year for the 2023 tax year return (line 24) and on line 23 the excess contributions was stated as $6500 (prior year's contributions of $12,000, which makes the cumulative total $18,500). If the amount should be $18,000 on the 2024 form 5329, then is it also wrong on the amended 2023 form 5329?

Thanks again!

[DaveF1006]

No, the financial institution is likely correct. 1099-R forms report distributions (withdrawals) made during the calendar year (January 1 to December 31). If you withdrew $18,000 in calendar year 2024, their system will only reflect that $18,000, even if $500 of that was intended to "correct" a 2023 contribution. 

Yes, you made the mistake.  Form 5329, Part IV (for Roth IRAs), tracks the "excess" currently in the account.

• Line 18 asks for the excess contribution from the previous year. 
• Line 20 is where you record the amount you actually distributed (withdrew) during the tax year to reduce that excess.

If you only moved $18,000 out of the account in 2024, you cannot claim a $18,500 reduction on line 20.

When you file your amendment for the 2024 return, you should update Form 5329 to match the reality of the 1099-R.

• Line 18  $18,500  This is the cumulative excess carried over form the 2023 return
• Line 20  $18,000  This must match the actual distribution shown on your 1099-R.
• Line 24/25  $500 This shows the IRS that you still have $500 of "excess" left in the Roth.    

[ETFtrader]

Thanks DaveF1006

Just to clarify all contributions that were originally made to the Roth IRA from 2021 to 2024 were distributed in February 2025, for a total of $28,500. In addition, $7200 in earnings were also distributed. A grand total of $32,700 was distributed. That is captured correctly spanning the two 1099-R's from the brokerage.

The 1099-R's from the brokerage captured the $32,700 as: 1099-R #1 for $18,000 (code J) and 1099-R #2 for $14,700 (code PJ), of which $7200 was income and $7500 was the original contribution.

I expect to file a form 8606 this year to "clear the balance" of either the $18,500 remaining as per the 2024 form 5329, or if I have to amend the 2024 and 2023 returns, to reflect $18,000, the form 8606 needs to show $18,500, right? That is what I am unsure about. Do I need to adjust anything on the prior returns so the form 8606 "balances" with the form 5329?

Last year @DanaB27 gave me the instructions below to follow in 2025 but now I am not sure if the amount should be the $18,000 that is on 1099-R #1 or what I reported on the form 5329 in 2024 ($18,500).

Form 8606

Use this form in 2025 tax year to report and then eliminate from taxation (10% tax on early distribution) the $18,000 in contributions from 2021-2023.

Part III
Line 19: Should show $18,000
Line 21: Should show $18,000
Line 22: Should show $18,000
Line 23: Subtract line 22 from line 21, should show $0

Next year in TurboTax when you get the 2025 Form 1099-R with code J for the $18,000 distribution you will follow these steps:

Click on "Search" on the top and type “1099-R”
Click on “Jump to 1099-R” and enter all your 1099-Rs
Click "Continue" on the "Review your 1099-R info" screen after you added all you Form 1099-R
Answer "Owned Any Roth IRA for Five Years?" screen
Continue through the questions and make sure you enter the net contributions prior to 2025 on the "Enter Prior Year Roth IRA Contributions" screen (you will include the excess contribution amount from 2021 - 2023).

[ETFtrader]

I need some more clarification on this.

• Line 18  $18,500  This is the cumulative excess carried over form the 2023 return
• Line 20  $18,000  This must match the actual distribution shown on your 1099-R.
• Line 24/25  $500 This shows the IRS that you still have $500 of "excess" left in the Roth.

I don't understand the $500 on line 20 and line 24/25. I believe there is no $500 excess as this amount was distributed last year and is included on the other 2025 1099-R from the financial institution that showed a gross distribution of $14,700 ($7000 was a 2024 contribution, $500 was a 2023 contribution made in 2024 and $7200 was earnings through 12/31/2024). There is no balance in the Roth IRA as of end of 2025.

Recall, on the 2024 return I used TurboTax to input a 2025 tax year 1099-R based on Dana's feedback. On that 1099-R I used a value of $14,200 because I did not anticipate that the financial institution would include the $500 that related to tax year 2023 in that amount on their 1099-R. I expected to see one 1099-R for $18,500 and another for $14,200.  See your comment here: this: https://ttlc.intuit.com/community/retirement/discussion/re-excess-roth-ira-contributions-since-incep... 

Regarding Line 20, on the 2024 form 5329 I reported $0 since there were no Roth IRA distributions made in 2024 (the issue was caught in April 2025).  The entire Roth IRA balance, including all contributions and all income through 12/31/2024 were distributed in April 2025. That is why the 1099-R's from the financial institution are for the 2025 tax year.

OPEN QUESTIONS

1) I need to amend the 2024 tax return 1040 line 4a to reflect the 2025 1099-R from the financial institution amount of $14,700. There should be no tax liability as the additional $500 is contributions made that relate to tax year 2023. Question: Do I need to make any amendment to the 2023 or 2024 tax returns for the $18,000 vs $18,500 difference between what was previously reported on form 5329 vs the amount on the financial institution's 1099-R? 

2) For this year's 2025 return, when I input the 1099-R, you commented:

1. 1099-R #2 ($14,700, Code PJ): Even though you received this form in 2025, Code P means "Taxable in 2024." In TurboTax, when you enter this, the software should ask you "Which year is on this 1099-R?" and then tell you that it needs to be handled via an amended 2024 return.

Question: Since Code P only relates to the "earnings" portion of the distribution, or $7200 and not the $500 which was a Roth contribution made in CY 2024 that applied to tax year 2023, how is the $500 excluded? 

3) Question: How to resolve the $18,000 that is on the brokerage's 1099-R vs the $18,500 that was reported on the previously amended 2023 form 5329 (line 24) and again reported in 2024 form 5329 (lines 18,22, 24) . Given that the $500 difference is already included on the 1099-R from the financial institution above for $14,700.

4) Question: For this year's tax return, I thought I need to file a form 8606 based on Dana's feedback last year. Given the $18,000 vs $18,500 difference I am worried I am not going to do this correctly. In his comment he said:

Next year in TurboTax when you get the 2025 Form 1099-R with code J for the $18,000 distribution you will follow these steps:

1. Click on "Search" on the top and type “1099-R” 
2. Click on “Jump to 1099-R” and enter all your 1099-Rs
3. Click "Continue" on the "Review your 1099-R info" screen after you added all you Form 1099-R
4. Answer "Owned Any Roth IRA for Five Years?" screen
5. Continue through the questions and make sure you enter the net contributions prior to 2025 on the "Enter Prior Year Roth IRA Contributions" screen (you will include the excess contribution amount from 2021 - 2023).

The resulting form 8606 will show this:

Part III
Line 19: Should show $18,000
Line 21: Should show $18,000
Line 22: Should show $18,000
Line 23: Subtract line 22 from line 21, should show $0

[ETFtrader]

@DaveF1006 Any thoughts on this?

In summary:

1) Do I need to amend any of the prior returns, including the prior amendments due to the 1099-R mismatches? If so, which forms and lines need to be changed?

2) What do I need to file for 2025 and what amounts/lines need to be input? Form 5329, Form 8606?

[DaveF1006]

Here is the breakdown of how to reconcile these amounts and answer your specific questions for the 2025 filing season.

1) Amending Prior Returns (2023 & 2024)

You mentioned the 2024 return reported $0 in distributions on Form 5329 because the distribution physically happened in April 2025. That was technically correct for the 2024 tax year, as the 6% penalty applies to whatever excess remains in the account on December 31 of the tax year.

The $18,000 vs. $18,500 mismatch: You generally do not need to go back and amend the 2023 or 2024 Form 5329 just to change the $18,500 to $18,000. Why? Because the $500 difference is already accounted for in your other 2025 1099-R ($14,700).

The 2024 1040 Amendment: Yes, you should proceed with amending the 2024 Form 1040 line 4a to reflect the $14,700 distribution. Even though the money moved in 2025, Code P tells the IRS "this belongs on the 2024 return." Since the $500 was a contribution (basis), it is not taxable, but the $7,200 in earnings will be.

2) The $500 "Code P" Exclusion

You asked how the $500 is excluded if Code P makes the earnings taxable.

1. The Mechanism: When you enter a 1099-R with Code P, TurboTax (and the IRS) looks at Box 2a (Taxable Amount).
2. If your 1099-R is for $14,700 (Box 1) and shows $7,200 (Box 2a), the tax software automatically knows that the difference ($7,500) represents a return of your original contributions.
3. Because Roth contributions are made with after-tax dollars, returning them is never taxed again. The software handles this "exclusion" by only carrying the Box 2a amount to the "taxable" column of your 1040.

3) Resolving the $18,500 vs $18,000 on Form 5329

This is the part that feels "wrong" on the forms but has a logical fix in the 2025 software:

1. On your 2025 Form 5329, Line 18 will start with the $18,500 carryover from 2024.
2. To "zero this out," you will report distributions on Line 20.
3. The Fix: Even though the 1099-R #1 says $18,000, you will effectively show the IRS that the entire excess was removed by using both 1099-Rs. In the "Calculations" or "Prior Year Excess" section of TurboTax, you will indicate that the total amount withdrawn to correct prior-year excesses was the full $18,500.
4. The IRS matches the total distributions against the total excess. As long as your total distributions in 2025 ($18,000 + $14,700) exceed the total excess reported ($18,500), the penalty ends.

4) Filing for 2025: Form 5329 vs. Form 8606

For your 2025 return, you will likely need both forms, but they serve different purposes:

Form 5329 (The Penalty Killer) This form is used to show the IRS that the excess is finally gone so they stop charging the 6% penalty.

1. Line 18: $18,500 (Carryover)
2. Line 20: $18,500 (The amount of "prior-year excess" you actually distributed in 2025).
3. Line 24/25: Should finally be $0.

Form 8606 (The Basis Tracker)

This form tracks the "layer cake" of your Roth IRA (Contributions vs. Earnings).

1. When you enter the $18,000 (Code J) 1099-R, TurboTax will generate Part III of Form 8606. 
2. Since you are distributing the entire account, you must ensure your "Total Basis" (all contributions you ever made, including the ones that were "excess") is entered.
3. If your Basis is equal to or greater than the contribution portion of the distribution, Line 23 (Taxable Amount) will be $0.
4. Note: Because you closed the account entirely, the IRS rules for "Return of Excess Contributions" and "Regular Distributions" overlap. The $18,000 distribution is treated as a regular distribution of basis (Form 8606), while the $14,700 (Code PJ) is treated specifically as a corrective distribution (taxable in 2024).