I removed an excess ROTH IRA contribution before the tax filing deadline. Do I need to do anything more than update TT with the corrected amount to keep track?

Forum|Forum|7 years ago
June 1, 2019
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I erroneously contributed more than allowed to my ROTH IRA in 2018. I mailed the proper form to the Financial Intuition, with a postmark before the tax filing deadline, with the instruction to remove the excess amount. Do I need to do anything more than update the final and correct amount in TT so it can track properly year to year. Thank you!

TurboTax Home & Biz Windows

DawnC0

Level 12

Yes, you can report the return of excess and earnings on this year's return. You owe tax on the earnings (and a penalty if you are under 59.5) that must be reported on this year's return. If you don't adjust for it now before you file, you will have to file an amended return if the return of excess includes any earnings. You can enter the 1099-R that you will receive next year on this year's tax return, which will correct the excess and report the earnings income this year. The IRA custodian won't send to you the code JP 2019 Form 1099-R until near the end of January 2020. You'll need to report this on your 2018 tax return as if you have already received the Form 1099-R.:

Box 1 = total received back
Box 2a = earnings portion
Box 7 = codes J and P

In the follow-up, indicate that this is a 2019 Form 1099-R. On Form 1040, TurboTax will include the excess contributions on line 4a, the earnings on line 4b, and will include an early-distribution penalty (10%) on the earnings on Form 5329 if you are under 59.5.

The Code P drop-down will say ''earnings/excess deferrals taxable in 2017'' but it means taxable in the previous year which is appropriate in your situation since this is a 2019 Form you are entering.