Excess Roth IRA Contributions

[manav_panchal]

Hi,

I have contributed 7000$ in 2024 towards year 2024 to Roth IRA. In January 2025 I have contributed another 7000 towards year 2025. Now I got to know that I can not contribute to Roth IRA due to Income limits, so I removed all 14000$ as excess contribution in March 2025. Now I will receive form 1099-R in 2026 so how should I report this to IRS for year 2024?

[DanaB27]

You should receive two forms. One 2025 Form 1099-R with codes PJ for the 2024 excess contribution and one 2025 Form 1099-R with codes 8J for the 2025 excess contribution.

The 2025 Form with codes 8J will be entered next year on your 2025 tax return.

The 2025 1099-R with codes PJ will have to be included on your 2024 tax return and you have two options:  

• You can wait until you receive the 2025 Form 1099-R in 2026 and amend your 2024 return or
• You can report it now in your 2024 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 2025 Form 1099-R into the 2025 tax return since the withholdings are reported in the year that the tax was withheld. The 2025 code P will not do anything to your income to the 2025 tax return income but the withholdings will be applied to 2025.

To create a Form 1099-R in your 2024 return please follow the steps below:

1. Login to your TurboTax Account 
2. Click on the "Search" on the top right and type “1099-R” 
3. Click on “Jump to 1099-R”
4. Answer "Yes" to "Did you get a 1099-R in 2024?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning)
7. Box 2a enter the earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

Also make sure you indicate in the IRA contribution interview that you withdrew the excess contribution by the due date:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Enter the Roth IRA contribution
5. Continue until the penalty screen and enter the excess contribution amount withdrawn.

[lemon2]

Hi @DanaB27 ,

My situation is a bit different to this user.

I am doing a Roth IRA excess contribution removal for the second year (this month I removed the appropriate amount for the 2024 tax year). I followed your instructions for my federal tax return so that I can file a 1099-R with my 2024 tax return.

May I get instructions on how to “Update” the “Adjustments” within my NJ tax return please?

The “Roth Distribution for You” screen seems to be correct. But I’m not sure how to fill in the fields in the next screens. Thank you!

[DanaB27]

You will need to include the excess contribution amount in the contribution amount previously taxed during the NJ state return. On the “IRA Information” screen:

• If this is the first year of withdrawal then select “Yes, this was the first year of withdrawal from this IRA” enter your contribution (including the excess contribution for 2024) next to “Total of IRA contribution previously taxed”
• If you withdrew funds before 2024 then select "No, I've made withdrawals from this account before" and click “Continue” and enter on the “IRA Withdrawal” screen your contribution (including the excess contribution) for 2024 next to “Taxable Contributions Made to IRA during 2024”

[lemon2]

Hi @DanaB27, can you please re-explain what "Taxable Contributions Made to IRA during 2024" means?

[DanaB27]

These are the after-tax contributions you made to the Roth IRA.

@lemon2 

[lemon2]

Thank you!

[lemon2]

Hi @DanaB27 ! Another question on "Taxable Contributions Made to IRA during 2024". Is this the amount I initially contributed? Or the amount that remains after I removed the excess contribution? Thank you!

[DanaB27]

You will enter the amount you initially contributed.