topic Roth IRA excess contribution correction - do I have to file Form 5329? in Get your taxes done using TurboTax

Roth IRA excess contribution correction - do I have to file Form 5329?

3758395872 — Mon, 20 Feb 2023 07:12:41 GMT

Hi, I would really appreciate any help with understanding the tax implications of reversal of an excess contribution to a Roth IRA, before the year was over.

In February 2022, I contributed ~$4.5k to my Roth and invested the funds.
In December 2022, I realized my AGI was higher than expected, and corrected the over-contribution before the year was over. There was a loss on the investments and so ~$3.9k was returned to me to reverse the contribution.
I am younger than 59.5

Do I need to file Form 5329 / am I subject to the 10% early withdrawal penalty?

I believe when I was initially inputting the info into TurboTax, it told me that I currently had a penalty because I made an excess contribution to my Roth. I believe I then entered that I withdrew $4.5k of contributions before the due date of my return (I cannot figure out how to access this area again) and there were no more questions. Is it right that I entered $4.5k? I don't believe it is prompting me to fill out Form 5329. Since I corrected the mistake before the year was up, are there any penalties I am subject to or other actions I need to take?

Thanks so much!

Re: Roth IRA excess contribution correction - do I have to file Form 5329?

HopeS — Mon, 20 Feb 2023 13:53:34 GMT

Since you have already withdrawn the excess contribution there should be no penalty and the excess does not carry forward. You would enter the amount you contributed and as you proceed through the entry, TurboTax will indicate that you have excess contributions and will ask if you plan on withdrawing this before the due date of the return (April 15th).

To enter your Roth IRA contribution:

On the left side of your screen, click Federal.
At the top of your screen choose Deductions and Credits.
Scroll down to Retirement and Investments.
Click Start on Traditional and Roth IRA Contributions.

@3758395872

Re: Roth IRA excess contribution correction - do I have to file Form 5329?

3758395872 — Tue, 21 Feb 2023 04:28:57 GMT

Thank you so much!