Traditional IRA return of excess contribution

[mThorsen]

I made an excess contribution of $26702.73  to my traditional IRA in 2023 for 2022.  I withdrew the excess contribution before the tax filing deadline.  I did not report the excess contribution to my IRA on my 2022 taxes but declared only the allowable contribution for my 2022 taxes.  In 2023, I received a bank form in lieu of IRS 5498.  The bank classified the return of excess contribution as a normal distribution and withheld 2,427.52 in federal withholding taxes.  How do I report and get credit for the additional taxes withheld from the return of the excess contribution which was included in my income and taxed already?

[DanaB27]

To clarify, did you request the withdrawal of excess contributions plus earnings? If you did then you should have gotten a 2023 Form 1099-R with codes 8 and 1 and only the earnings will be taxable shown in box 2a. If you requested the withdrawal of excess contributions plus earnings then you need to check with your financial institution why they issued this as a regular distribution.

If you just requested a regular distribution without the earnings, then technically you are not exempt from the 6% penalty on your 2022 tax return. You will have to enter the Form 1099-R as a regular distribution:

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”