Roth IRA Excess contribution penalty still calculated on Form 5329 even though I withdrew the contribution before the deadline

[thurminator]

I really tried to search for an answer on this one, so if this has already been addressed elsewhere please share a link.

I had Excess Roth IRA contributions in 2025 due to our MAGI. I withdrew the excess contributions plus the earnings in 2026. I've followed the instructions shared in this post, this post, and this post to account for the withdrawal of the excess contributions and earnings and include them on my 2025 tax return.

The problem I'm running into is that TurboTax is still calculating the 6% penalty on the excess contributions, even though I told it that I withdrew the contribution prior to the filing deadline. I'm using the desktop version of TurboTax Deluxe. How do I get it to realize that I withdrew the contributions in time and don't need to pay the 6% penalty? I tried correcting the 5329 form directly but it takes me to the IRA Contributions Worksheet when I try to edit it, so I don't think that's what I'm supposed to do.

@AnnetteB6 @Annetteb65 @DanaB27 

[fanfare · Accepted solution]

If you removed the excess plus earnings already, you did not make any 2025 Roth contribution.

Does this help?

The first post that uses code PJ for a future 1099-R is the correct mechanism to pay the tax on positive earnings on this tax return before filing, rather than amending later.

@thurminator 

[thurminator]

@fanfare Yes, this makes total sense and what I thought the answer was based on my reading of the instructions for IRS Form 5329. I just needed someone to confirm and make sure I was doing it correctly when I went back to the Roth IRA contribution section and deleted the contributions. Thank you!

From those instructions, the important part highlighted bold:

You can withdraw some or all of your excess contributions for 2025 and they will be treated as not having been contributed if:

• You make the withdrawal by the due date, including extensions, of your 2025 tax return; and

• You withdraw any earnings on the withdrawn contributions and include the earnings in gross income (see the Instructions for Form 8606 for details). Also, if you hadn't reached age 59½ at the time of the withdrawal, include the earnings as an early distribution on line 1 of Form 5329 for the year in which you report the earnings. Report this amount on line 2 and enter exception number 21.