Removal of excess contribution to Roth IRA subject to 6% penalty? tax on gains?

[mokus]

My husband contributed too much to his Roth IRA via mega back door conversion with after tax money. Part of the excess contribution happened in 2022 but he didn't realize it until 2023. He removed all of his excess contribution in 2023 in a way that he moved investments (stocks) into his regular brokerage account without selling them. 

He got 3  different 1099-R 2023 forms for 3 different removals, the distribution codes are 8J, J and PJ. Are these correct?

The question is , does he have to pay 6% penalty because of this?

If not, can you walk me through the steps to fill out the form so Turbotax calculates it correctly? 

Does he have to pay taxes on the removal of access contribution even though the stocks were not sold, so technically the gains were not realized? 

[DanaB27]

No, you don't have to pay the 6% penalty if you removed the excess contribution plus earnings before the extended due date.

You don't need to enter Roth IRA contribution on your 2022 and 2023 return and TurboTax will not calculate the 6% penalty on Form 5329.  If you entered the contribution then you can enter the excess contribution amount as withdrawn on the penalty screen at the end of the IRA contribution interview.

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. On the "Do you have any Excess Roth Contributions" answer "No"
5. Continue until the penalty screen and enter the excess contribution amount withdrawn.

You will have to pay tax on the earnings listed in box 2a on your Form 1099-R.