2021 1099-R FOR ROTH IRA EXCESS CONTR FROM 2020 (CODE J,P)

[DanaB27]

Since you had no taxes withheld you do not have to enter the 2021 Form 1099-R with codes PJ on your 2021 tax return. You only have to enter it on your 2020 tax return. Please see How do I amend my 2020 return?

Only the earnings will be taxable and are subject to the 10% early withdrawal penalty if you are under 59 ½.

You stated you filed Form 5329 for 2020. Did you already create Form 1099-R on your 2020 return and part I on Form 5329 was filled out? Or was part III (for excess traditional IRA contribution) or part IV (for excess Roth IRA contribution) filled out? Please be aware, that if you withdrew the excess contribution plus earnings before the 2020 due date then you do not need to pay the 6% tax.

@aa73

[aa73]

Thank you for clarifying!

My 2020 return did not have a 1099-R form. Only Part IV was filled out on my 2020 Form 5329.

[DanaB27]

If you withdrew the excess contribution plus earnings before October 15th, 2021 then you do not have to pay the 6% penalty on your 2020 tax return. Please make sure that you enter the withdrawn contribution amount (without earnings) on the penalty screen during the IRA contribution interview when you amend your 2020 tax return.

1. Click on "Search" on the top right and type “IRA contributions” 
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Continue until you get to the penalty screen and enter the contribution amount withdrawn (without earnings or losses).

@aa73

[macuser_22]

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@aa73 wrote:

Thank you for clarifying!

My 2020 return did not have a 1099-R form. Only Part IV was filled out on my 2020 Form 5329.

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A 2021 code PJ means a Roth excess taxable in 2020, not 2021.   The tax on the earnings must be paid in the year that the contribution was for, not returned.  When you enter the 2021 1099-R in the 2020 software it will ask which year the 1099-R is for - say 2021 and that will properly tax the box 2a amount.   When it asks for prior Roth contributions include the excess contribution amount so it will not be taxed.  

If you filed a 5329 and paid the 6% penalty in 2020 then delete that 5329 form and include in the explanation for the 2020 amended return that the 5329 originally filed was incorrect and there is no 6% penalty or 5329 form since the excess was timely returned in 2021 before the due date..

[tax n00b]

Hi,

My tax situation is similar - that is I withdrew an excess contribution for 2021 with a loss. My understanding is that I will not receive a 2021 1099-R as the  withdrawal is being processed (pending transfer).  Since I've filed an extension for 2021 tax year, I will have until Oct 17 to file.

Am I correct that I do not need to report anything extra? Simply, treat the 2021 excess contribution as non-existent (not reporting it) as the withdrawal results in a net loss, despite the fact that the brokerage firm might report it later via 1099-R?