Correcting 2023 and 2024 Excess Roth Contributions

[slpmom]

I'm hoping for some assistance on my excess Roth contributions. @DanaB27 

2023: my husband and I each had excess Roth Contributions. We paid the 6% penalty on our 2023 return. This failed to get recharacterized until this month (March 2025). 

2024: my husband and I each had excess Roth contributions. They were recharacterized this month (March 2025). 

Questions:

1. re: 2023 excess contributions:

a) Will we be penalized again for these even though we recharacterized them before 4/15/25? If so,...

b) Will we have to pay the 6% penalty again on our 2024 tax return? 

c) How do we report this using TurboTax online? 

2. re: 2024 excess contributions:

a) Will we have to pay the 6% penalty even though they were recharacterized before 4/15/25? 

b) How do we report this using TurboTax online? 

c) We can report this on 2024 taxes without waiting for the 1099-R for 2025. Is that correct? 

Thank you so much for your help. I greatly appreciate any guidance you can provide!

[DanaB27 · Accepted solution]

1. Yes, you will have to pay the 6% penalty for the 2023 excess on your 2024 return since it wasn't removed by December 31, 2024.  Please note, you cannot make a recharacterization after the due date. See Pub 590-A for details. Please check with your financial institutions since they should not have accepted a recharacterization after the due date. 

You must take a regular distribution (without earnings) to remove an excess contribution after the extended due date.

2. No, you do not pay the 6% penalty for the 2024 excess since you recharacterized the excess before the due date.

You will enter the recharacterization when you enter the contribution to the Roth IRA for 2024:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “Roth IRA”
5. Answer ‘Yes” on the “Roth IRA Contribution” screen
6. Answer “No” to “Is This a Repayment of a Retirement Distribution
7. Enter the Roth contribution amount 
8. Answer “Yes” to the recharacterized question on the “Switch from a Roth To a Traditional IRA?” screen and enter the contribution amount (no earnings or losses) on the next screen.
9. TurboTax will ask for an explanation statement where it should be stated that the original $xxx.xx plus $xxx.xx earnings (or loss) were recharacterized.
10. On the "Do you have any Excess Roth Contributions" answer "Yes"
11. On the "Enter Excess Contributions" screen enter the total excess contribution from 2023 (if it wasn't carried over).
12. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" if you are thinking about doing a backdoor Roth. Otherwise select "No". (If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

You will get a 2025 Form 1099-R  for the recharacterization with code R-Recharacterized IRA contribution made for 2024 and this belongs on the 2024 return. But a Form 1099-R with code R won't change anything on your return. You can only report it as mentioned above. Therefore, you can ignore the Form 1099-R with code R when you get it in 2026. The box 1 on the 1099-R will report the total recharacterized amount (contribution plus earnings) but it does not separately report the earnings and box 2a must be zero.

Please see What if I made an excess Roth IRA contribution for additional information.

[slpmom]

Thank you so much for your prompt and thorough reply @DanaB27 

Re 2023 excess contributions: I'm checking with my financial advisor, but I'm guessing that these were taken as regular distributions, not recharacterizations, I just didn't understand that on my side. If they were taken as a distribution, how do I report this on our 2024 taxes in TurboTax online? 

Again, thank you so much. 

[DanaB27]

If you took a regular distribution for the 2023 excess contribution then you will get a 2025 Form 1099-R with code J and this will be entered next year on your 2025 tax return.

Next year on your 2025 tax return:

1. Click on "Search" on the top and type “1099-R” 
2. Click on “Jump to 1099-R” and enter all your 1099-Rs
3. Click "Continue" on the "Review your 1099-R info" screen
4. Answer all the questions and make sure you enter the net contributions prior to 2024 on the "Enter Prior Year Roth IRA Contributions" screen
5. On the "Do you have any Excess Roth Contributions" answer "Yes"
6. On the "Enter Excess Contributions" screen enter the total excess contribution from 2023.

Entering the 2025 Form 1099-R with code J with resolve the 2023 excess contribution.