topic Fidelity is sending me a letter for Roth IRA Excess Contribution withdraw not a 2020 1099-R in Retirement tax questions

Fidelity is sending me a letter for Roth IRA Excess Contribution withdraw not a 2020 1099-R

itsmdorsey — Tue, 16 Mar 2021 17:34:28 GMT

I got married in March 2020, this combined salary put us over the limit for being able to contribute. I put in $2600 when I should have done zero. I got with Fidelity and did the forms for withdrawing excess contribution against 2020, but its now 2021. I have not filed 2020 taxes yet and would like to handle this with the 2020 return.

Fidelity will not be sending a 2020 1099-R they will be sending a letter with the amount earned on the $2600 that is taxable.

Do I need to "fake" a 2020 1099-R to get Turbotax to allow me to enter line 4a and 4b on my 1040? Do I need to do anything with the 2021 1099-R I will receive from Fidelity that says I handled the withdraw in 2020?

Re: Fidelity is sending me a letter for Roth IRA Excess Contribution withdraw not a 2020 1099-R

DanaB27 — Tue, 16 Mar 2021 17:46:51 GMT

You will get a 1099-R 2021 in 2022 with codes P and J for the withdrawal of excess contribution and earning. This 1099-R will have to be included on your 2020 tax return and you have two options:

You can wait until you receive the 1099-R 2021 in 2022 and amend your 2020 return or
You can report it now in your 2020 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 2021 1099-R into the 2021 tax return since the withholding is reported in the year that the tax was withheld. The 2021 code P will not do anything in 2021 tax return but the withholding will be applied to 2021.

To create a 1099-R in your 2020 return please follow the steps below:

Login to your TurboTax Account
Click on the Search box on the top and type “1099-R”
Click on “Jump to 1099-R”
Answer "Yes" to "Did you get a 1099-R in 2020?"
Select "I'll type it in myself"
Box 1 enter total distribution (contribution plus earning)
Box 2 enter the earnings
Box 7 enter P and J
Click "Continue"
On the "Which year on Form 1099-R" screen say that this is a 2021 1099-R.

Re: Fidelity is sending me a letter for Roth IRA Excess Contribution withdraw not a 2020 1099-R

itsmdorsey — Fri, 19 Mar 2021 12:21:45 GMT

Thank you for the quick reply.

I'm a little confused on how I trigger the right screens for the Roth IRA contribution knowing that my AGI is too high. Do I say "Yes" to making any excess contribution in 2020 or prior years, then it seems to say I made an excess contribution? Then on the amount I withdrew do I put the total under the IRA section walk through?

Re: Fidelity is sending me a letter for Roth IRA Excess Contribution withdraw not a 2020 1099-R

dmertz — Fri, 19 Mar 2021 13:12:05 GMT

No, do not enter it as a prior-year excess contribution. (This question asks for excess contributions make for years prior to 2020, not for contributions made for 2020.) Enter the Roth IRA contribution under Deductions & Credits, then, when TurboTax indicates that you have an excess $2,600 Roth IRA contribution, indicate that you had $2,600 (not the gain/loss-adjusted amount) returned. TurboTax will prompt you to prepare an explanation statement. Separately you'll enter the anticipated code PJ 2021 Form 1099-R.