Crypto Roth IRA

[dubosea4]

During 2021, I opened and funded a Crypto Roth IRA using cash from my savings.  A couple of weeks later I discovered that I had overfunded the Crypto Roth IRA and transferred a potion of crypto to my personal wallet to fall within the Roth IRA funding limits.  I have since received a 1099-R from the Crypto Roth IRA custodian showing a gross distribution of $3,700.  I'm over 59 1/2 but the Crypto Roth IRA was only a few weeks old when I corrected the overfunding, so I'm not sure how to account for this in Turbo Tax.  How do I enter the 1099-R information as a correction as opposed to a distribution?

[RobertB4444 · Accepted solution]

You'll enter the 1099-R into the system for this year.  The taxable amount in box 2a should be empty or zero since it was a Roth and didn't have time to earn any money in the current year.  The code in box 7 should be '8' which indicates it was a corrective withdrawal and the amount in box 2a is taxable.