What is the Correct 1099-R Distribution Code For Early Distribution of Original Contributions to a Roth IRA?

[FuskieBP]

In 2019, I was forced to withdraw the original contributions to my Roth IRA, leaving behind the gains in excess of those contributions. My broker sent me two 1099-R forms, one which listed Distribution Code T for 4 of the distributions, and other that listed Distribution Code J.  I am assuming one (or both) of those is wrong.  But I cannot find anything within TurboTax or the larger internet that clearly states what Distribution Code should be used when taking distributions of original contributions before age 59 1/2. 

I don't know why this is so hard - I would expect that withdrawing original contributions to a Roth IRA before age 59 1/2 is not uncommon. The Roth IRA is 20yrs old, so the 5-year holding minimum should not apply. My understanding is that these distributions should be tax and penalty free, but time is running out for me to get my broker to update my records before July 15th. 

[macuser_22]

Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but:

• The participant has reached age 59½,

• The participant died, or

• The participant is disabled

If none for the above then a code J should be used.   If you were under age 59 1/2 or it is not an inherited Roth then code T is probably incorrect.

The box 7 code has nothing to do with removing your own prior contributions.       Because Roth contributions  apply to the aggregate total for all contributions to any Roth account that you have, the Roth trustee has no way to know about other Roth accounts that yiu have so it is up to you to track that and enter it yourself into the 1099-R interview.

You can always withdraw your own Roth contributions tax and penalty free.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

One of the followup questions will ask for your prior year** contributions not previously withdrawn. Those contributions that still remain in the Roth will not be taxed or subject to a early withdrawal penalty. That will add a 8606 form to your tax return with the Roth contribution and tax calculation in part III.

Note: **Prior year - any current year Roth contributions should be entered into the IRA contributions section. They will not show up in the prior years contributions but will be accounted for on the 8606 form that calculates the taxable amount.