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hslettel
Level 2

Recording 1099-R for excess distribution

I'm confused on this. I have 1099R for an excess contribution with a distribution code of "8J" I downloaded from Vanguard. I am 66 so this is not an early distribution so this should not have a penalty. After processing it, in the Other Tax Situations I was prompted for how to reduce the taxes owed. One option is Other (including being over age 591/2). I selected that, but don't know what amount it is looking for - the gross distribution or the taxable amount?  It also bothers me that it says on this same screen that it doesn't pertain to IRAs, but this was an excess contribution to a Roth IRA. Help!

 

 

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Accepted Solutions
dmertz
Level 15

Recording 1099-R for excess distribution

The code J is needed to indicate that this return of contribution was from a Roth IRA.  Since you were over age 59½ at the time of this distribution, to eliminate the early-distribution penalty normally indicated by the code J you'll need to claim an Other reason exception to the penalty on the taxable amount shown in box 2a of this Form 1099-R.

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4 Replies
dmertz
Level 15

Recording 1099-R for excess distribution

The code J is needed to indicate that this return of contribution was from a Roth IRA.  Since you were over age 59½ at the time of this distribution, to eliminate the early-distribution penalty normally indicated by the code J you'll need to claim an Other reason exception to the penalty on the taxable amount shown in box 2a of this Form 1099-R.

hbl3973
Level 8

Recording 1099-R for excess distribution

hslettel,

 

Reading your post, the 1099-R was for putting too much money into the account, not for taking too much out of the account.  The total of your direct IRA (Traditional+Roth) contributions are limited to the lesser of your earned income and $7,000 for ages 50 and up.  You do have until April 15th to work with Vanguard to undo the error.

hslettel
Level 2

Recording 1099-R for excess distribution

Perfect! Thank you so much!

hslettel
Level 2

Recording 1099-R for excess distribution

Thanks! I actually caught the error the same month that I put it in, so this 1099R is reflecting the distribution when they reversed it. I just wanted to make sure it wouldn't be taxed as an early distribution.

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