Removing Excess Traditional IRA contributions from 2023

[fiona5]

Hello, I made an excess contribution in my Traditional IRA for the year 2023. I have removed these excess contributions in July 2024 and haven't filed my TY 2023 return (applied for a 6-month extension). Already checked with the IRA financial institution, the New Form 1099-R(reflecting this removal transaction) will be generated until early 2025. 

My questions are:

1. To avoid amended returns in the future, can I directly adjust the IRA contribution amount in my TY2023 return without the Form 1099-R? (Haven't filed TY 2023, and adjust 2023 IRA excess contribution)

2. How do I enter this transaction into the TurboTax desktop version?

3. Will I need to pay a 6% additional tax or a 10% early withdrawal tax? 

4. Will I need to fill out Form 5329? How to reflect the removal transactions in Form 5329 to avoid 6% additional tax?

Thank you in advance!

[fanfare]

You requested an extension.

return of excess contribution:

before tax filing date including extension:   positive earnings allocable to the excess are included in income on 1040 Line 4b for the year of the contribution. negative earnings are ignored; in any case, for purposes of basis, consider the original contributed amount as returned.

positive earnings removed are no longer penalized 10% if you are under age 59 1/2. (eliminated in 2023)

@fiona5 

[fanfare]

https://ttlc.intuit.com/community/taxes/discussion/[product key removed]ved-for-jp-j-early-distribut...

The trick for entering a 1099-R for excess earnings now is discussed at the end of this thread.

@fiona5 

[fiona5]

Thank you!

[fiona5]

Thank you!!

[fiona5]

Hi,

I've inputted a new 1099-R, for box 7, I selected "8 - Return of contribution taxable in 2023". Please see the snapshot below. (Have negative earnings, the excess contribution for 2023 is $4000)

However, Form 5329 is still generated (see snapshot below). Is there any other form or place that I can input to avoid generating additional taxes?

Thank you!

[fiona5]

@fanfare 

Could you please help answer the questions that I sent above? Thank you so much!

[fanfare]

• You did not follow the the procedure in the thread I referred you to. You made up your own distribution code.
• Use the procedure when allocable earnings are positive. You had negative earnings.  Negative earnings are ignored.

@fiona5