Roth IRA

Forum|Forum|3 years ago
January 20, 2023
2 replies
16 views

Vanguard mistakenly put $2,695 into my husband's Roth IRA account instead of regular brokerage account last year. We both retired. The financial adviser sent him a 1099R and asked him to amend his last year's tax return. What form should he fill out and submit to IRS. Should he amend it first prior to file 2022 tax return?

On his 1099R item 7 (distribution code is 8, J). Do they mean anything?

Thanks.

Not A Product Question

Best answer by Tina551

A 5329 will not be generated if there were no excess contributions. They were removed timely and you indicated the taxable amount on the Form 1099-R is zero (box 2a). It's not yet clear of the year printed on your Form 1099-R(s).

There is nothing to amend since the money was removed and there were no earnings to report or pay excise tax on (Form 5329).

As indicated by @dmertz and @fanfare, based on your comments there is nothing to amend for 2021. Dividends in a Roth IRA will not be reported on Form 1099-DIV at any time. Distributions will only appear and be reported on Form 1099-R. Only your regular brokerage account will report dividends earned.

The code descriptions you requested are:

8—Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2022. (If there is any taxable amount in Box 2a.)

J—Early distribution from a Roth IRA, no known exception (in most cases, under age 59½).

On Turbo Tax software show code 7 distribution code P is for return contribution taxable in 2020 instead of taxable in 2021. Is it because I am using the 2021 turbo tax software to amend the 2021 return?

Also asked me 1099R form shows 2021 or 2022. Since Vanguard form shows 2022 1099R even asked us to amend the 2021, should I click on 2022? Thanks.

Anonymous_

Level 15

I will page @dmertz. Please check back to see if he has any input.

dmertz

Level 15

If Vanguard mistakenly put the $2,695 into your husband's Roth IRA in 2022 and then later in 2022 processed a return of contribution of that $2,695, your husband correctly received a 2022 Form 1099-R with codes J and 8 in box 7. The amount distributed would have been adjusted for any investment gain or loss on the amount returned and any investment gain shown in box 2a would be taxable on your 2022 tax return.

I don't see why there is any need to amend your 2021 tax return. Just enter the $2,695 Roth IRA contribution into 2022 TurboTax, indicate that $2,695 was returned, and enter the Form 1099-R. TurboTax will prompt for an explanation statement where you'll describe the contribution and its return since the amount distributed can differ from the amount returned due to investment gain or loss.

Tina551Author

Level 3

Thank you for your reply.

We just realized Vanguard sent my husband 2 X 1099R, one for $5361 (item 7 distribution code is J,P) and one for $2,695 (item 7 distribution code is 8,J). Vanguard moved the money back to his brokerage account. He didn't take any money out from the Roth or brokerage accounts. Both 1099R item 2a show 0 amount.

He just sent an email to Vanguard and asked what years are the 1099R for? If those are for two different tax years item 2a show 0. Do we need to amend them?