After a Withdrawal of an Excess IRA Contribution, do I still have to submit my original 1099-R?

[kcc2]

In late 2025, I did a Backdoor Roth where I contributed a non-deductible $8,000 to a Traditional IRA and then converted $8,002 to a Roth IRA a few days later, where the $2 difference reflects the interest gained between the dates I contributed and converted. In early March 2026, Turbo Tax told me that I was ineligible to contribute to a Traditional IRA because I had $0 in earned income.  At the end of March, I submitted a Return of Excess Contribution Form with my brokerage firm, and they withdrew the original $8,000 plus $1,125 in net investment attributable (NIA) from my Roth IRA.  In Turbo Tax, I created a mock 1099-R to reflect the return of excess contribution and the NIA for my 2025 taxes.  Do I still submit my original 1099-R to reflect the original $8,000 contribution and $2 gain for my 2025 taxes?  Thank you!

[dmertz]

You'll need to omit the Form 1099-R that reports the Roth conversion.  The explanation statement that you provide for the return of contribution must include that the Roth conversion was a failed conversion due to having been made with funds that were not eligible for conversion.

With everything entered correctly, the $1,125 should be included on Form 1040 line 4b and nothing should be present on Form 8606.

[dmertz]

In may previous post I assumed that a code-JP 2026 Form 1099-R from the IRA custodian will show $9,125 in box 1 and $1,125 in box 2a.  If it actually shows only $1,123 in box 2a (just he gains while in the Roth IRA), it would be necessary to report the original Form 1099-R so that the $2 gets taxed.  Either way, $1,125 needs to appear on Form 1040 line 4b.

[kcc2]

Thank you dmertz.  Based on a previous conversation with my IRA custodian, I created a mock 1099-R with:

• code-JP, 2026
• $9,125 in box 1
• $1,125 in box 2a

However, I just called them again, and they that the $1,125 reflects the gain on $8,000 starting from the date I converted to a Roth IRA (not the date I contributed to a Traditional IRA) to the date I withdrew my excess contribution last week.  So, the $1,125 doesn’t seem to include the $2 gain from my original backdoor Roth.  Currently, my original 1099-R is still in Turbo Tax and the result of having both 1099-R’s is that my 1040 looks like:

• 4a = $17,127 (which seems to be the 8000+8000+1125+2)
• 4b = $1,127 (which seems to the 1125+2)

Turbo Tax also created a 4852 and an 8606 and I tried to explain what happened in the 1040 4a Explanation Statement.  Does having two 1099-R’s in this case sound right?  And does a 1040 4a = $17,127 and 4b = $1,127 seem ok, too?

[dmertz]

"the $1,125 reflects the gain on $8,000 starting from the date I converted to a Roth IRA (not the date I contributed to a Traditional IRA) "

You converted $8,002, not $8,000, so that would be a gain of $1,123 on $8,002.  In that case, my second suggestion makes more sense:  Show a conversion of $8,002 with $8,000 of basis, then show a return of the $8,002 failed conversion plus $1,123 of gains by changing box 2a of the code-JP 2026 Form 1099-R to $1,123.  That way you get the correct amount of $1,125 on line 4b.

[dmertz]

Do not enter the code-JP Form 1099-R as a substitute form.  This from is not missing or incorrect, it just won't be issued until next year.  Enter it as if you have already received the actual form.  Entering as a Form 4852 will block you from e-filing.

[Edit]

... or maybe in this case you do need to enter it as a substitute form, otherwise I don't see how you can include an explanation.

[kcc2]

So, I converted $8,002, but when I called my IRA custodian again today to ask for more details about how they did the withdrawal of excess contribution transaction, they said that they only took out $8,000 plus $1,125 in gain calculated off of a base of $8,000.  When I asked why they didn’t take out $8,002, they said they weren’t able to take out more than I was eligible to contribute which was a max of $8,000.  If they had actually taken out $8,002, I think the gain would have been slightly higher than $1,125.

Because of how my IRA custodian said that the withdrawal of excess contribution had to be done, I believe that when I get my actual 2026 1099-R, it will show $9,125 in box 1 and $1,125 in box 2a.  I’m concerned that if I enter anything other than that on my substitute 1099-R with code JP 2026, it might cause a mismatch when I get my actual 1099-R next year and be “flagged” by the IRS?  Also, does code JP 2026 still make sense because when I get my actual 1099-R next year and ignore it, then the IRS will know I’m ignoring it because I already entered it and explained it this year, like you mentioned in your note?

And, Turbo Tax says I am blocked from e-filing my state taxes (which I don’t know if I can get around), though TT says I can still e-file for federal.

What do you think?  Thanks so much for your help!

[dmertz]

"When I asked why they didn’t take out $8,002, they said they weren’t able to take out more than I was eligible to contribute which was a max of $8,000."

There is no such limitation.  The limitation is that you can't request to be returned an amount greater than the amount actually contributed.  In this case, because it was a failed conversion, the $8,002 deposited into the Roth IRA constituted an ordinary contribution of $8,002.  Had a return of $8,002 been made, the attributable gain would still have been $1,125.  (The $8,002 distribution from the traditional IRA corrected the excess in the traditional IRA.)

That said, I don't think that I would worry about the difference.  Yeah, $2 of excess contribution remains in your the Roth IRA, but 6% of $2 is zero when rounded so there is effectively no penalty.  If you truly want to correct this remaining excess, you can take an ordinary, nontaxable distribution of $2 from your Roth IRA.

If I was going to report this scenario on my own tax return, I would probably enter an $8,000 traditional IRA contribution, then indicate that I had that $8,000 contribution returned accompanied by $2 of attributable gain, entering a substitute code-8 Form 1099-R for the one that reports the conversion.  I would then enter an $8,002 ordinary Roth IRA contribution and indicate that I had $8,000 of that returned accompanied by $1,125 of attributable gain, reported on a code-JP 2026 Form 1099-R, leaving an excess Roth IRA contribution of $2 on Form 5329.  That would complete the 2025 tax return, showing $1,127 of taxable income on line 4b of Form 1040.  I would then take an ordinary $2 Roth IRA distribution and report that on my 2026 tax return, including reporting it on line 20 of the 2026 Form 5329 to be subtracted from the $2 on line 18.  But I'm probably being pedantic.

The way you have reported it is also reasonable because it too results in $1,127 on line 4b of Form 1040.  Although I might consider adding a $2 ordinary Roth IRA contribution to account for the $2 excess that remains in the Roth IRA, that's probably unnecessary because the remaining $2 excess would probably be considered to be de minimis.  Even if not reported as an excess contribution, you could still obtain an ordinary $2 Roth IRA distribution in 2026 to truly eliminate it.

[kcc2]

Thank you for laying out my options.