Traditional IRA Excess Contribution 1099-R Box 7

[wyfei123]

I first deposit too much into traditional IRA in 2020 (for 2019), when I found out it was too late so filed Tax extension and withdrawal before the extended due date. The excess contribution and withdrawal were both recorded in the filing, so I guess I wouldn't need to file amend for 2019.

Now the problem is that I didn't know I need to tell the IRA Broker before the withdrawal, now I got a 1099-R with Box 7 filled code 1, which was suppose to be code P. Just called the broker they said can't change it as of now. So should I file 1099-R with code P myself? or just ignore the 1099-R since I have reported the excess contribution withdrawal last year. Thanks!

[ThomasM125]

You have a couple of options. You could enter the 1099-R form as it is stated and indicate that you rolled the money over to another retirement account. This is not technically correct, but it would have the correct result of showing the distribution as not being taxable.

The other option is to not enter the 1099-R and wait for the IRS to assess taxes on it down the road and send you an invoice. If that happens, you can send a correspondence to the IRS explaining what happened and that should resolve the issue. That would be the technically correct way of handling it, assuming you can't get the 1099-R form corrected.

[wyfei123]

Thanks! But I am confused about reporting 1099-R. Since I reported the excess contribution and withdrawal in the last tax report, IRS should have already know that withdrawal. If I report the 1099-R this year, wouldn't they record the same excess fund withdrawal for the second time?

[ThomasM125]

The form 1099-R for 2020 just looks like a normal withdrawal to the IRS. They won't associate it with what you reported on your 2019 tax return.