2022 Form1099-R Box 7 Code PJ - Roth IRA withdrawal - amendment needed?

[arsdean]

Hello All,

When filing 2021 taxes last year (2022), noticed income was too high for contributing to Roth IRA. So I had my brokerage back out excess contributions - which was the entire $6000 contribution plus $190 gain. In Turbotax (for my 2021 return) I selected contributions withdrawn before due date and entered "6000". 

In 2023 I received a 1099-R form from the broker with a gross distribution (Box 1) of $6190 and a taxable amount (Box 2A) of $190. Box 7 (distribution code) says "PJ".  The 1099-R form has a year of "2022" and *not* "2021" which to me suggests that it goes into the 2022 return.

I entered this form into Turbotax, with the $190 gain (form says 2022). Is there a need to amend my 2021 return at all? 

[SharonD007]

No, you do not need to amend your 2021 tax return since you reported your excess contribution and withdrawal on your 2021 tax return. The amount on your 2022 1099-R that you received with the Codes P & J that you entered in your 2022 tax return will not be taxed but if you had federal withholdings in box 4 or state withholdings in box 14, it will be included in the taxes that you already paid and will be deducted from your tax liability. 

To check that this income is not reported on your tax return, follow these instructions to preview in TurboTax Online:

1. Launch TurboTax
2. Select Pick up where you left off
3. Scroll down to Tax Tools and Select Tools
4. Select View Tax Summary
5. Select Preview my 1040 in the left menu
6. Lines 4a and 4b is where you would see any IRA distributions.  If you have only the 1099-R that you described above, there should not be any amounts in those boxes.

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[arsdean]

Thank you! There are no State or Federal withholdings in box 4 and 14.  Also lines 4a and 4b on the 1040 are blank. The issue that I am confused about is the taxable amount of "190" on the withdrawal. When the overcontribution withdrawal was entered into turbotax last year (for 2021 tax year) , it was for the 6k that was originally contributed and not the gain of 190. The amount was returned to my brokerage account. I thought this might be taxable along with a withdrawal penalty? 

[DanaB27]

Yes, the earnings will be taxable and subject to the 10% early withdrawal penalty (if you are under 59 1/2). Earnings on an excess contribution have to be reported in the year the contribution was made for. Therefore, the earnings on an excess contribution for 2021 have to be reported on your 2021 tax return.

To confirm, it seems you only entered on your 2021 tax return that you withdrew the excess contribution (on the penalty screen during the IRA contribution interview) but you didn't create Form 1099-R to report the distribution (as Tax Expert SharonD007 had assumed)?

If you didn't create Form 1099-R for the distribution of the excess contribution and earnings then you will have to amend your 2021 tax return to report it.

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. On the "Which year on Form 1099-R" screen say that this is a 2022 Form 1099-R.
5. Click "Continue" after all 1099-R are entered and answer all the questions.
6. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Another reason" if you are over 59 1/2 (if you are under 59 1/2 click "Continue")

@arsdean 

[arsdean]

Thanks DanaB27 - can a previous year amendment be e-filed or does it need to be manually printed? Can this also impact State taxes in that year and will those also need to be potentially amended? I read on another post that only a 5329 (additional tax on qualified plans) form needs to be completed and submitted for the appropriate year - not sure if this is in lieu of or in addition to amending an entire tax return. Thanks for your help! 

[LindaS5247]

In most cases, Form 5329 must be filed as part of an amended tax return for the year the distribution should have been made. However, if a tax return wasn't previously filed for that year, and there are no other changes to be made, the Form 5329 can be submitted on its own.

Your 2022, 2021, or 2020 federal Form 1040-X amended return may be eligible for electronic filing if the original return was successfully e-filed using TurboTax.

Click here for instructions for how to amend your tax return in TurboTax.
 

Click here for "How to file an amended return with TurboTax."

When you enter your changes into TurboTax it will flow through to your State Tax Return if applicable. Each state has its own form to amend a tax return. TurboTax will select the right state forms for you when you prepare your federal amended return and supply instructions for submitting it to your state.