Withdrawal of excess Roth Contribution in February 2025 for year 2024 - 1099-R 2025?

[cuttermilw]

I have been reading through the responses and would appreciate clarification to responses in my situation.

My Roth IRA excess contribution happened last year when filing my 2023 tax return. Turbo Tax identified the amount of $2,090 during tax preparation, which my broker then re-characterized in March 2024 as a 2024 contribution instead of from 2023. The distribution included $118 in earnings. So the money never actually left the account, and the amount of the excess contribution was what was removed, unlike some of these other posters who removed additional funds.

Fast forward to now where I have a 2024 1099-R with those amounts in lines 1 ($2,207.88) and 2a ($118) with no taxes withheld and codes J and P. Do I have to amend my 2023 return to include the $118 in earnings or am I able to report those in 2024 (since the distribution occurred in 2024)? I do not believe I entered the $118 anywhere on my 2023 return.

Thank you in advance!

[fanfare]

which my broker then re-characterized in March 2024 as a 2024 contribution instead of from 2023. 

now where I have a 2024 1099-R with those amounts in lines 1 ($2,207.88) and 2a ($118) with no taxes withheld and codes J and P. "

The statements are contradictory. no wonder you are confused.

The 10990R says code P which means 2023 which means the broker did not change the year of contribution.

you have to report $118 on your 2023 tax return.

@cuttermilw 

[Opus 17]

@fanfare 

If it was a recharacterization, the earnings aren't withdrawn and aren't taxable.

@dmertz  can you assist here?

[fanfare]

You're misreading what the OP said.

@Opus 17 

[dmertz]

Code J and P in box 7 indicate a return of contribution, not a recharacterization.  If cash distributed as a return of was deposited into a traditional IRA, that's an independent cash contribution to the traditional IRA, not a recharacterization.

[jf19882]

Hi Dmertz,

You've been so helpful on this informative chain. I just wanted to quickly run by you my situation to ensure I file correctly with Turbotax this year.

• I mistakenly contributed $7k to Roth IRA in December 2024 forgetting the income limit (which rules me out of direct Roth contributions)
• Worked with my bank in February 2025 to remove this excess contribution plus its earnings (i.e., the full $7k initial contribution plus the $130 of earnings made on that contribution) 
• I plan to cash both checks (principal and earnings), contribute a non-deductible $7k to my new trad. IRA, and have the bank do the backdoor / convert it to a Roth (which will be counted as my Roth contribution for 2025 tax year given you can't do prior-year backdoors for 2024 after the calendar year ends in December)

It sounds from this chain that after taking these steps (the removal of excess from Roth, and then backdoor to Roth), there won't be any tax documentation immediately provided by my bank that I could use right away in filing now for the 2024 tax year, is that typically correct? Please correct me, but if I would like to solve this mistake during filing this tax season for the 2024 year, it sounds like I must:

1. Enter $7,000 as a Roth IRA contribution for 2024 (is this correct to still do even though I removed it?)
2. Enter $7,000 as the amount returned to me (even though I technically removed the $130 earnings too as well?)
3. Enter a substitute 1099-R manually in my 2024 tax filing 
4. Enter the $7,130 distribution amount ($7k initial contribution + $130 earnings) in box 1 of the substitute 1099-R
5. Enter the $130 earnings in box 2(a)
6. What do I enter in box 7 - is it "8" or "J' or "P" or some combination of the three? 
7. Answer "No, the box is blank"
8. Say the Form 1099-R is a 2025 Form 1099-R
9. Indicate that the $130 of earnings were "Corrective distributions made before the due date of the return"
10. Then, for a year from now when I have the true bank-provided 1099-R, in what ways would I fill out taxes next year if I handle this now by manually generating my own 1099-R ahead of time? 

Thank you so very much for your help with this, and I apologize for the longer outreach post, but I'm very grateful for your help!!

[DanaB27]

Yes, you can enter the Roth IRA contribution and then indicate that you withdrew it by the due date on the penalty screen:

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 ($7,000)

If you made an excess contribution in 2024 and withdrew the 2024 excess Roth IRA contribution plus earnings in 2025 before the due date, then you will get a 2025 Form 1099-R in 2026 with codes P and J. This 1099-R will have to be included on your 2024 tax return and you have two options:  

• You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
• You can report it now in your 2024 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to your income to the 2025 tax return income but the withholdings will be applied to 2025.

To create a Form 1099-R in your 2024 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2024?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning) $7,130
7. Box 2a enter the earnings $130
8. Box 7 enter J and P
9. Click "Continue"
10. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings ($130) under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

@jf19882 

[jf19882]

Thank you very much! I followed all the steps, but in the math for my tax bill it is still counting the ~$130 as taxable (I put it in manually as such) even though I entered that ~$130 in the Corrective distributions made before the due date of the return box. I'm not sure that my exemption is being accounted for. Would you mind advising me on best course of action to confirm one way or the other? Thank you!

[dmertz]

The $130 of attributable earnings are indeed taxable, so you are getting the correct result.

[jf19882]

Apologies, confused myself. Thank you!

[effectivedepartures]

Apologies for continuing to extend this thread, I've followed the steps you outlined for my similar situation -

TurboTax online seems to be requiring that I input the Payer's address and TIN for the 1099-R which I have not yet received. Is this actually required? How can I find this information?

[Opus 17]

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@effectivedepartures wrote:

Apologies for continuing to extend this thread, I've followed the steps you outlined for my similar situation -

TurboTax online seems to be requiring that I input the Payer's address and TIN for the 1099-R which I have not yet received. Is this actually required? How can I find this information?

---

If you never made a withdrawal before, try google, or try calling the custodian, it's not secret information.  If you did previously make a withdrawal, copy the info from the old 1099-R. 

[effectivedepartures]

I thought I was past this mess but apparently not.

I ended up withdrawing too much excess contribution ($2570 instead of $2280) and now turbotax is throwing an error for the IRA Contributions Worksheet Line 26 that Taxpayer's excess contribution credit should be equal to $290 equal to Form 5329 Part IV. I understand that this $290 is the excess excess withdrawal. What to do here? Set to $290 and move on?

[DanaB27]

To confirm, you made a excess contribution in 2024 for 2024 and withdrew the excess plus earnings in 2025? And did have any excess contributions left from the previous years?

If yes, then please make sure you do not have an entry for the "Enter Excess Contributions" screen. You only enter excess contribution from prior years that were not removed.

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. On the "Enter Excess Contributions" screen delete the entry
5. On the "How Much Excess to 2024?" screen delete any entry

@effectivedepartures 

[effectivedepartures]

omg it worked. you're a godsend @DanaB27. I somehow missed that they wanted the excess contributions of "previous years".

Thanks again. Gave you a thumbs up 🙂