topic Roth Excess Contribution in Retirement tax questions

Roth Excess Contribution

Peasquare — Tue, 10 Feb 2026 16:45:28 GMT

On April 10, 2025 I made an $8000 roth contribution for tax year 2024. It turns out I was not allowed to make the contribution as I had no earned income, only interest. I received form 5498 in May of 2025. In November 2025 my financial advisor distributed the funds (as a removal of excess). I have now received my 2025 1099-R for that distribution. Will turbotax calculate the excess and generate form 5329 and calculate the penalty? Do I need to do anything special to make that happen since the contribution was for 2024 and it was not reversed until late 2025?

Re: Roth Excess Contribution

ReneV4 — Wed, 11 Feb 2026 00:21:48 GMT

Yes. You do need to do something special, in that your 2024 tax return may need to be amended if the Roth contribution was not entered and no Form 5329 was generated.

If you do not see a penalty amount in your 2024 Form 1040, Schedule 2, then an amendment is required.

The reason for this is that your removal of excess transaction, which took place in November of 2025 missed the window wherein you could correct the excess contribution (October 2025).

Because that window was missed, amending your 2024 will then make it possible to correctly reflect what took place with this excess contribution on your 2025 tax return.

Here is a link to where to find the 2024 TurboTax software if you did not use TurboTax for your 2024 filing. Note that if you used TurboTax to complete your 2024 return, amending it will be free. Here is a link if that is the case: How do I amend my federal tax return for a prior year?

When you work on your 2024 return, you will go to your IRA Contributions section (Deductions & Credits) to enter this contribution, which will then be flagged as an excess contribution due to your not having earned income to report.

During the amendment process, when asked if you withdrew the money, you will answer "No", since you did not. This will trigger Form 5329 for your 2024 return.

Once you have amended your 2024 return, you can then work on your 2025 return with the correct information.

In your 2025 return, when entering the 1099-R, answer "Yes" when asked if this was a return of ecxess contributions. TurboTax will then generate Form 5329 that shows the money being distributed, which will zero out the balance and stop the recurring penalties.

[Edited 02/10/2026 | 4:20 pm PST] @Peasquare

Re: Roth Excess Contribution

Peasquare — Tue, 10 Feb 2026 20:02:09 GMT

I did not receive a 1099-R for the 2024 contribution. I only received a form 5498. Can I still enter the contribution amount in the 1099-R section when amending my 2024 return?

Re: Roth Excess Contribution

Peasquare — Wed, 11 Feb 2026 00:43:52 GMT

Thank you. I believe I understand. There is no Schedule 2 with my 2024 1040 return, so clearly no penalty was calculated then. If I understand you correctly, amending 2024 with the contribution amount, and then entering the 1099-R on my 2025 return, showing the removal of the excess, Turbotax will then calculate the penalty on the excess contribution and create any necessary forms.

Re: Roth Excess Contribution

ReneV4 — Wed, 11 Feb 2026 17:52:38 GMT

Yes. If you do not see the penalty in your 2024 Form 1040, then you must amend your 2024 return.

Correct. You would not have received Form 1099-R for the distribution until the following year (2025).

You enter the amount of your original contribution (from Form 5498) in the Deductions and Credits, Retirement and Investments section.

At that point, the system will alert you of the excess contribution and generate Form 5329, along with penalties (for 2024)

Once you have amended your 2024 return with the above information, you can then work on your 2025 tax return.

You will then enter the Form 1099-R to reflect the removal of the excess contribution, not for penalties. The penalties were calculated with the 2024 amendment.

Re: Roth Excess Contribution

Peasquare — Mon, 16 Feb 2026 20:28:14 GMT

If I amend the 2024 return to report the excess roth contribution, would I also need to amend my state return?

Re: Roth Excess Contribution

dmertz — Tue, 17 Feb 2026 14:50:26 GMT

To elaborate on what ReneV4 said, since you failed to report the excess contribution on your 2024 tax return, you need to amend your 2024 tax return. The deadline to remove an excess Roth IRA contribution made for 2024 was October 15, 2025. Because the excess was not removed until November 2025, the excess was subject to a 10% penalty on your 2025 tax return calculated on 2024 Form 5329 Part IV.

Removing the excess in November 2025 should have been done with an ordinary distribution of $8,000, code J, T or Q in box 7 of the 2025 Form 1099-R. Even though the contribution for 2024 was an excess contribution, it added $8,000 of contribution basis to your Roth IRAs which reduces the taxable amount of the $8,000 to zero on your 2025 tax return. Your 2025 tax return must include Form 5329 Part IV showing $8,000 on lines 18, 20 and 21, and $0 on line 22.

If the 2025 Form 1099-R includes code 8 or P in box 7 (along with code J), it seems that the excess was not properly corrected.