Roth IRA Distribution before 59 1/2

[tah0476]

This should be an easy one.  I contribute to a Fidelity Roth IRA each month and the money gets deposited into a "core cash" account prior to investing in a few mutual funds.  I made a $1200 withdrawal from the core account last year, and I received a 1099-R for early withdraw.  The $1200 contribution I already paid taxes on, and I do not pay an early withdraw penalty when taking out my contributions prior to 59 1/2......right?

So I don't see where I have to pay anything at all (taxes or penalty) for taking the $1200 out of the core account.  Why did I get a 1099-R and will Turbotax just work this out when I entry the 1099-R info?

[LindaS5247]

When you take a distribution from your Roth IRA, your IRS Form 1099-R shows you how much you took out and how much of it is taxable. 

The total distribution is shown in Box 1 and the taxable portion of the distribution is shown in ​Box 2a​. 

If Fidelity withheld any money from your distribution for federal taxes, that amount appears in ​Box 4​. If your distribution is tax-free, your financial institution does not withhold money from the withdrawal.

Roth IRA distributions that meet the requirements for a qualified distribution are tax-free. 

A qualified distribution occurs when the account has been open for at least ​five years​ and you are at least ​59 1/2 years​ old. 

However, these rules apply to withdrawals of Roth IRA earnings.  It sounds like your withdrawal was of your contributions to the Roth IRA.  I would confirm this with Fidelity.  There is a very distinct difference.  If they are incorrect, they should issue a new/corrected Form 1099-R.

There is a penalty for early withdrawal of earnings on a Roth IRA if you are under age 59 1/2. If you take a non-qualified Roth IRA distribution, the Form 1099-R will not list your early withdrawal penalty. This penalty will be determined separately using Form 5329. 

Typically, the penalty is ​10 percent​ of the taxable portion of the withdrawal, on top of taxes due. The penalty may be waived if the money is used for certain purposes, such as high medical bills, college tuition or a first-time home purchase. If an exception applies, report it on Form 5329.

Check your Form 1099-R entries or delete it and try re-entering it and see if that helps.

Click here for where to enter your Form 1099-R in TurboTax.

[dmertz]

Make sure that you click the Continue button on the page that lists the Forms 1099-R that you have entered and, when asked, enter or confirm your basis in Roth IRA contributions.  TurboTax will use this information to prepare Form 8606 to determine the taxable amount of your Roth IRA distribution, which will be zero if you took out no more than your contributions.