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dmertz
Level 15

Excess Roth IRA contribution made in 2017 and withdrawn before filing in 2018. When and how do I pay taxes on any earnings?

You cannot do a 2018 Form 1099-R for a distribution in 2019.  Because it's late to do a return of contribution of any more of your 2017 contributions before the due date of your 2017 tax return, you are stuck with excess contribution penalty for 2017 that resulted from the increase in income on your 2017 tax return caused by the earnings reported in box 2a of the 2018 Form 1009-R that you already have and, if you can't apply this excess carried into 2018 as part of a 2018 Roth IRA contribution, you'll have another 6% penalty for 2018 on this remaining excess.

To avoid another penalty for 2019, you'll either need to be able to apply it as part of your 2019 Roth IRA contribution or obtain a *regular* distribution of the excess, with no adjustment for earnings.  Since it comes from your Roth IRA contribution basis, the regular distribution won't be taxable or subject to penalty.  You'll report that distribution on your 2019 tax return and it will appear on line 20 of your 2019 Form 5329.

Excess Roth IRA contribution made in 2017 and withdrawn before filing in 2018. When and how do I pay taxes on any earnings?

Thank you dmertz.  I can finally see the light.  You are a steely-eyed tax man.  Kudos.
Renatolibra
Returning Member

Excess Roth IRA contribution made in 2017 and withdrawn before filing in 2018. When and how do I pay taxes on any earnings?

Hi macuser_22

I am tuning into the same situation as the gentleman you have assisted here with the issue of reporting a withdrawal of excess and earnings of a Roth IRA contribution. 
Your answer as to how to report it is the only one I found online that makes sense, at least to me, and I thank you for it. 
I am going thru this with the same issue but on 2019 Tax year. My entire contribution to my Roth IRA is being considered an excess because I had no income other than profit on stock sales and a traditional to Roth rollover. 
I believe I understood how to enter this mockup 1099-R now for 2019 (in order to ignore the one that will be issued on 2021 for the 2020 tax year); but my question is: 

do I still have to report the Roth IRA contribution on form 5498 that turned out to be an excess contribution? 

Renatolibra
Returning Member

Excess Roth IRA contribution made in 2017 and withdrawn before filing in 2018. When and how do I pay taxes on any earnings?

Hi macuser_22

I am tuning into the same situation as the gentleman you have assisted here with the issue of reporting a withdrawal of excess and earnings of a Roth IRA contribution. 
Your answer as to how to report it is the only one I found online that makes sense, at least to me, and I thank you for it. 
I am going thru this with the same issue but on 2019 Tax year. My entire contribution to my Roth IRA is being considered an excess because I had no income other than profit on stock sales and a traditional to Roth rollover. 
I believe I understood how to enter this mockup 1099-R now for 2019 (in order to ignore the one that will be issued on 2021 for the 2020 tax year); but my question is: 

do I still have to report the Roth IRA contribution on form 5498 that turned out to be an excess contribution? 

zotch7917
Returning Member

Excess Roth IRA contribution made in 2017 and withdrawn before filing in 2018. When and how do I pay taxes on any earnings?

yes

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