Two 1099-Rs: 2023 and 2024 IRA excess contributions

[husky23]

Hello,

In 2023 I contributed $6,500 to my Roth IRA. I ended up surpassing the income limit and had to withdraw it as an excess contribution which I did in February 2024 while doing my taxes. I of course did not receive a 1099-R for this in time for filing. If I look back at my 2023 return, I see $6,500 in the excess contribution section and $390 (6%) as "additional tax". 

In 2024 the same thing happened with my $7,000. I contributed in January but realized by October I would have to withdraw it and did so.

Now that I am doing my taxes for 2024, Vanguard sent me two 1099-Rs in the same file for both of these events. Since both excess contributions were removed in 2024 (even though they pertained to different contribution years), do I import both 1099-Rs into this year's taxes? Or only the one that corresponds to the 2024 contribution/withdrawal?

Turbotax tells me I also have to amend my 2023 taxes. I assume when I do that, they want me to enter only the

1099-R that corresponds to that year's removal. So is it correct to import both this year? 

Any help is appreciated. Thank you.

[RobertB4444]

You would need to amend the 2023 return in order to remove that penalty since you withdrew the excess contribution before the due date of the return.  Then you just put in the 2 for this year and you should be good to go.

[Edited 02/05/2025  07:11 AM PST]

@husky23 

@husky23 

[dmertz]

"If I look back at my 2023 return, I see $6,500 in the excess contribution section and $390 (6%) as "additional tax"."

You must amend your 2023 to remove that penalty and enter the code JP 2024 Form 1099-R because the amount in box 2a of that form is taxable on your 2023 tax return, not on your 2024 tax return.  When going back through the Roth IRA contribution, when TurboTax asks if you had the excess contribution returned before the due date of your 2023 tax return, answer that you had $6,500 of contribution returned.

[husky23]

Thanks. Another issue I am running into is when I import the 1099-Rs, the next question is if I took disaster distributin (no), then it asks for the value of the IRA as of Dec 31, and finally it says "Let's see if we can reduce your early withdrawal penalty". The next screen says "Identify the plan" and my only options are qualified retirement plan, nonqualified annuity, modified endownment contract. Roth IRAs are none of these but it doesn't let me continue unless I choose one.. 

If I choose qualified retirement plan, the next screen has the "Corrective distribution" field I believe I should use but the description of this screen clearly says "If you used the money you took out of a retirement account (other than an IRA)..." how else can I input the corrective amount if not through here?

[dmertz]

For a distribution from a Roth IRA, make sure that you've included the code J from box 7 of the payer's Form 1099-R  in box 7 of TurboTax's 1099-R form.

[husky23]

The only way I can see to get through this is by uploading the 8J 1099-R by itself which will ask me what I did with the IRA money. Then I upload the PJ one separately and it tells me I need to amend 2023. At that point, I think I can quit the rest of the questions as I already told it about the 8J money earlier on and my taxes due number was adjusted to reflect that. Because if I continue the line of questioning it gets to "identify the plan" and none of the options are relevant. 

Before, I was uploading both documents at the same time which seemed to skip the IRA question and go straight to "identify the plan" where I would get stuck.

Problem solved..?

[DanaB27]

You do not need to enter the 2024 Form 1099-R with codes PJ on your 2024 return unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2024 Form 1099-R with codes PJ into the 2024 tax return since the withholdings are reported in the year that the tax was withheld. The 2024 code P will not add the income to the 2024 tax return income but the withholdings will be applied to 2024.


As dmertz mentioned you will have to enter the 2024 Form 1099-R with codes PJ on your 2023 tax return.  Please see How do I amend my federal tax return for a prior year?

To remove the 6% excess penalty on your 2023 return:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Continue until the penalty screen and enter the excess contribution amount withdrawn.

To enter Form 1099-R with codes PJ on your 2023 return:

1. Click on the "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. On the "Which year on Form 1099-R" screen say that this is a 2024 Form 1099-R.
4. Click "Continue" after all 1099-R are entered and answer all the questions.
5. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

[husky23]

"You do not need to enter the 2024 Form 1099-R with codes PJ on your 2024 return unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding."

Yes this is the case. As I withdrew my 2023 contribution in February 2024, the taxes for it were withheld in 2024. I definitely need to add both documents to this year's taxes and then separately also go and amend the 2023 taxes.

The issue is when adding both documents to my 2024 taxes, I do not get asked "Did you use your IRA to pay for any of these expenses?". Instead I get asked "Identify the plan.." and none of the options are IRA-suitable. The only way I can get it to ask me "Did you use your IRA..?" is by uploading the 8J 1099-R alone and going through the questions for it.

If I then go and add the PJ one as well I go through a series of questions that ends in "Let's see if we can reduce your early withdrawal penalty" and the next question is "Identify the plan: Qualified retirement plan, nonqualified annuity, modified endowment contract" It forces me to choose one to continue even though IRAs are none of these three options.

[husky23]

I believe I have successfully amended the 2023 return now so we can put that one aside.

On this year's taxes, I upload both 1099-Rs. Then:

1. Do I need to tell Turbotax I contributed $7,000 this year at all if I just took it back? When I go to the contribution screen, it says "$8,047 was previously entered on Form 1099-R. Do not enter this amount here." If I put 0 I reach a screen that says "Enter Excess Contributions for Prior Years". Do they just mean the $6,500 from 2023?
2. The next screen is "How much excess to 2024? - Indiciate how much of your remaining excess contribution of $0 you want to credit towards your 2024 Roth IRA". The value is only 0 if I put $6,500 on the prior screen so if that is correct I will put 0 here.

If I enter $13,500 things are a little different but for now I will just ask the above. If I do it like the above I am still being charged a 6% penalty which is what leads me to assume it's not correct..

[DanaB27]

1. Yes, you can put $0 as the contribution for 2024 or enter your contribution and then tell TurboTax on the penalty screen at the end of the IRA contribution interview that you removed it by the due date. Both methods work.

No, you will not enter the $6,500 "Enter Excess Contributions for Prior Years". You removed the 2023 excess plus earnings before the due date, therefore, you no longer have an excess contribution.

2. You don't apply any excess to 2024 since you removed the 2023 excess plus earnings before the due date. 

@husky23 

[husky23]

Thank you (and everyone so far). This makes sense.

So at this point my only open question is, when I upload the 1099-Rs and start going through the questions, ("Let's see if we can reduce your early withdrawal penalty..") I am getting the "Identify the plan" screen where I MUST choose something. I can only make it work if I choose "qualified plan" and then add the corrective distribution amount on the next screen. I just want to make sure doing this is correct even though Roth IRAs are not qualified plans?

[MarilynG1]

It might be prudent to delete your imported 1099-R's and enter them manually to go down the correct path in TurboTax.

You are correct that a Roth IRA is NOT a qualified plan. A qualified plan means that contributions are tax deferred. Contributions to a Roth IRA are not tax-deferred, but because they are not, the withdrawals are not taxable.

The Code Q on your 1099-R designates a Qualified Roth Distribution.  Box 2a should be blank, and Box 2b checked. In the follow-up questions, indicate whether you rolled over the earnings or not.  You should not get the question you mentioned in either case.  

Here's more detailed info on Roth IRA Withdrawals.

@husky23 

[husky23]

I only have PJ and 8J 1099-Rs. There's no Q code. 

If I click through to the actual 5329 worksheet, that section says:

"Qualified retirement plan (including an IRA)" ? So Qualified is correct..? But then the next screen says "other than an IRA" : 

Also to clarify , this is the current situation:

• If I enter 8J 1099-R alone for money contributed and removed in 2024, Turbotax asks me what I used the IRA distribution for. I put $870 as a corrective distributon (2a taxable amount). 
• If I enter PJ 1099-R alone for money contributed in 2023 and removed in early 2024, Turbotax says I need to amend my 2023 taxes. No problem.
• If I enter BOTH 1099-Rs (regardless of it it's at the same time, or 8J first, or PJ first..) I am then asked to "idenitfy the plan". If I went the way of 8J first (so I already told it about the $870), and am forced to click Qualified to move on, that $870 is already pre-filled in on the next screen. Is this correct?

[DanaB27]

No, you wouldn't select Qualified Plan for an IRA and you are not getting the correct screens. 

It would be helpful to have a TurboTax ".tax2024" file that is experiencing this issue. You can send us a “diagnostic” file that has your “numbers” but not your personal information. If you would like to do this, here are the instructions for TurboTax Online: 

1. From the left menu select Tax Tools. 
2. Then select Tools below Tax Tools. 
3. A window will pop up which says Tools Center.  
4. On this screen, select Share my file with Agent. 
5. You will see a message explaining what the diagnostic copy is. Click okay through this screen and then you will get a Token number. 
6. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

The instructions for TurboTax Download: 

1. On your menu bar at the very top, click "Online"
2. Select "Send Tax File to Agent"  
3. Click "Send"
4. The pop-up will have a token number
5. Reply to this thread with your Token number and add @DanaB27 . This will allow us to open a copy of your return without seeing any personal information.  

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

As a workaround you can select "Qualified Plan" and then enter enter the  amount of earnings under "Corrective distributions made before the due date of the return". This will put the exception amount on line 2 of Form 5329 with code 21.

@husky23 

[TaxLiability]

I have the same issue, so I'll be curious to hear the outcome.  The way TT is asking me about my 1099-R's doesn't make sense.  I have three dated for 2024 for excess removal for 2022, 2023, and 2024 (removed before April).  My 1099-R's should finish my 2022 penalty and I should have a small income penalty for 2024.   

@DanaB27 1272086