Excess contribution Roth and 401k Roth

[austinmaxwells]

I have two Roth issues:

In 2024, we both contributed the max for each of our Roth IRA's ($7,500 each). We now realize while doing our 2024 taxes, that our income is too high. We have pulled the money out from our financial institution (it is a little bit more than the 7,500 each; I guess it's interest earned). For the 2024 return, do we still say yes that we contributed to ROTH IRA's? Since the checks we received are more than what we originally put in, how do we deal with that for tax year 2024? What is the best coarse of action for this?

Second, my husband started a new job in October 2024. He contributed $3600 to the company Roth 401k. However, upon doing taxes, we determined that he over contributed to his 401k Roth (he had retired in Sept from a previous job, where he had already maxed out). The difficult part is that in March 2025, we rolled over that $3600 to his regular Roth IRA, because he no longer works for that company (he was only there for about a month). His W-2 from that company shows a box 12 AA contribution of $3600. We need to get a corrected W-2, but am having a hard time, since the money was rolled over in 2025. We have already received a check back from our financial institution for this roll over - but they say we won't receive any 1099R's until 2026. How do we handle this for our 2024 taxes, if we can't get a corrected W-2 in time? 

Thank you very much for your assistance.

[ThomasM125]

No, you don't say you contributed to an IRA in 2024, since you withdrew the money. You will have to report the distribution of the IRA funds on your 2024 return along with the nominal earnings on it. You can either do that when you file your 2024 return or file it without reporting the distribution and then file an amended return to report in when you get the Form 1099-R in 2026.

To enter a refund of excess IRA contributions received in 2025 for 2024 contributions on your 2024 return, follow these steps:

1. Go to the personal income section of TurboTax 
2. Find the Retirement Plans and Social Security menu option in the Wages and Income section of TurboTax
3. Start or Update IRA, 401(k), Pension Plan Withdrawals (1099-R)
4. Choose Add Another 1099-R
5. Choose I'll type it in myself
6. On the screen that says Tell Us Which 1099-R You Have choose I need to prepare a Substitute 1099-R
7. Enter the distribution amount in box 1 of the substitute 1099-R
8. Enter the earnings in box 2(a)
9. Enter code "P" in box 7 (And code "J" if from ROTH IRA)

For the $3,600, you would have to make the same entry to report the distribution and earnings on the contribution. I don't believe the W-2 entry will create a penalty in TurboTax but it may. If it does and you can't get a corrected W-2, you will have to leave that entry off the W-2 input in TurboTax. That could invite an inquiry from the IRS after you file your tax return, but if it does you can explain what happened to resolve the issue.

[austinmaxwells]

Thank you for your quick reply. I have a clarifying question.

For these steps:

7. Enter the distribution amount in box 1 of the substitute 1099-R

8. Enter the earnings in box 2(a)

9. Enter code "P" in box 7 (And code "J" if from ROTH IRA)

Since I won't have the 1099R's until 2026, I am entering this info. How do I know what the distribution and earnings amount are? Would the distribution be the amount of the check I received from my financial institution? Would the earnings be the amount over what we originally put into the ROTH? (for example, put in 7500 to the Roth, got a check back of excess contributions in amount of $8200. So 7500 in box 1 and 700 in box 2?). I'm sure this will be on the actual 1099-R next year, but I'm worried that I don't quite know where to get those numbers from.

Thanks again.

[ThomasM125]

The distribution would be the amount of the check you receive. Your broker should be able to tell you what the earnings are, but it would typically be the additional amount you received back. I suggest you ask your broker what will be reported for the distribution and earnings on the 1099-R form you will receive if you are unsure.