Return of Excess

[ShelleySS]

I created a Roth IRA in Dec, 2023, I placed the funds in a CD, I realized that I was not eligible to have a Roth due to age and work status and removed and closed the account after the  CD matured in March 2024.  I have not yet received a 1099-R and cannot complete the box information.  I do not know if I should file the excess on the 2024 tax return, as my tax person is confused by the whole thing, or should I wait until May 2025 when I receive the 1099-R and file an ammended return?

[DanaB27]

To clarify, you moved the funds to a regular bank account out of the Roth IRA in March 2024? Then you should have gotten a 2024 Form 1099-R for the distribution. If you requested the withdrawal of excess contribution plus earnings then your 2024 Form 1099-R should have codes P and J. The earnings are taxable in the year you made the contribution. Therefore, this will have to be reported on your 2023 return. Please see How do I amend my federal tax return for a prior year? Please check with your financial institute where you can find the 2024 Form 1099-R.

Or do you mean it was closed in March 2025? If this is the case then you will have to pay the 6% penalty on your 2023 and 2024 return for the excess contribution. Since this was after the due date you were required make a regular distribution and you only had to withdraw the excess without earnings. You will receive a 2025 Form 1099-R with code J (if you are under 59 1/1). If you are over 59 1/2 the code will be T or Q. You will enter this Form 1099-R next year on your 2025 return and it will resolve the excess contribution.

On your 2024 return to pay the 6% penalty:

1. Click on “Jump to IRA contributions"
2. Select “Roth IRA”
3. On the "Do you have any Excess Roth Contributions" answer "Yes"
4. On the "Enter Excess Contributions" screen enter the total excess contribution from 2023