Roth IRA Excess Contribution 2018

Forum|Forum|6 years ago
February 6, 2020
6 replies
24 views

My husband and I are 62, and both have Roth IRA's. In 2018, we made our usual contributions. We actually made more money than usual and should not have contributed. But when we did the taxes in TurboTax, we somehow skipped the sections on IRA Contributions and did not enter our Roth IRA Contributions. We filed our taxes in April of 2019, and did not realize the error until July of that year.

In July of 2019, we withdrew the contributions and the earnings from both our IRA's and put it into a brokerage account. We have now received 1099R's, with a distribution code of PJ, with the amount that we withdrew.

My question is how do we correct this going forward. Do we refile 2018, entering in our Roth Contributions? Will TurboTax let us indicate that the money has been withdrawn, and will we have to pay a penalty for those contributions? And on our 2019 taxes, do we need to add the distribution earnings as income?

Thank You!

Best answer by macuser_22

A 2019 1099-R with a code "P" (non-Roth) or "JP" (Roth) in box 7 is taxable in 2018, not 2019

You must amend 2018 to report it. The 2018 1099-R interview will say that code P means "Return of contribution taxable in 2017", but the interview will ask if this it a 2018 1099-R or a 2019 1099-R. Say 2019 and the "taxable in 2017" becomes "taxable in 2018" (the year advances by 1 each year).

The returned contribution is not taxable, but any earnings reported in box 2a are taxable and also subject to an 10% penalty of you are under age 59 1/2.

macuser_22

Answer

Alumni - Champ

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

noconnAuthor

Level 2

Thank You! So once I redo 2018 taxes, I don't need to include these on my 2019 taxes?

macuser_22

Alumni - Champ

Correct, unless there was any tax withheld in box 4 which would be VERY unusual, then the withholding must be reported in the year withheld - 2019.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**