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?
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.
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.