topic Incorrect penalty applied to Code 8J for return of excess Roth contribution on 2025 return. in Get your taxes done using TurboTax

Incorrect penalty applied to Code 8J for return of excess Roth contribution on 2025 return.

craighorrell — Wed, 25 Feb 2026 17:19:59 GMT

In 2025 I made contributions to my Roth. In December 2025 my MAGI exceeded the limit so I requested a return of excess. This was completed in Dec 2025.

I received a 1099-R with code 8J in box 7. I called Fidelity and they double checked that the coding is correct.

Using TT Online, I am being assessed a 10% penalty for early withdrawal even though I am over 60 and my Roth has been open for much longer than 5 years.

Am I misunderstanding something or is this a bug in TurboTax ?

Re: Incorrect penalty applied to Code 8J for return of excess Roth contribution on 2025 return.

craighorrell — Wed, 25 Feb 2026 19:59:18 GMT

While researching this online I got the following response, which further points to this being a bug in TurboTax.

Penalty on Roth IRA Excess Contribution Earnings

General Rule

When you withdraw excess contributions from a Roth IRA, any earnings generated from those contributions may be subject to a 10% additional tax if the withdrawal does not meet certain conditions. This tax applies if the distribution is considered an early withdrawal and does not qualify for an exception.

Conditions for Avoiding the 10% Penalty
To avoid the 10% penalty on earnings from excess contributions, you must:
Withdraw the excess contribution and any earnings before the tax-filing deadline (typically April 15, or October 15 if you file for an extension).
Ensure that the earnings are reported as taxable income in the year the excess contribution was made.

Re: Incorrect penalty applied to Code 8J for return of excess Roth contribution on 2025 return.

RogerD1 — Fri, 27 Feb 2026 17:51:03 GMT

You are correct in your understanding. The Code J implies an Early distribution from a Roth with no known exception which is why the penalty is being assessed. But since this is a timely withdrawal of earnings on an excess contribution to Roth, you can follow these steps to eliminate the penalty.

Go to Federal and Income in TurboTax online
Find IRA, 401(k) and pension plan withdrawals - click Add/Edit then click Done
Click Continue to get to a screen "Let's see if we can lower your tax bill" Click Continue
Hit the pencil icon to edit who may qualify for a penalty exception
Select IRA, then Continue
On "These situations may lower your tax bill", scroll down to "Corrective distributions made before the due date of return" then enter the $ amount of the distribution of earnings reported on your 1099-R

Once you take these steps, this will eliminate the penalty on the earnings distribution.

Re: Incorrect penalty applied to Code 8J for return of excess Roth contribution on 2025 return.

craighorrell — Fri, 27 Feb 2026 20:04:50 GMT

Thank you so much. That worked perfectly.

Must say I am not impressed with how everything is so hard to find in TT this year.

However, all's well that ends well.

Thanks again.