Excess Contribution with Roth IRA in 2024

[kyle_wong]

Hi,

I have accidentally contribute $500 + $7000 in Roth with different financial Institution and I have completed the form of IRA Return of Excess Contribution Request to request withdrawal of $500 in my 1st contribute (There was no gain in the account with only $4xx)

Can you please advise me what should I do next? I have done my Tax Return filing 2024.

[DanaB27]

If you filed your 2024 return showing a 6% penalty on Form 5329 part IV then you should amend your 2024 return to remove the penalty and add a 2025 Form 1099-R with code PJ for the return of excess contribution. Please see How do I amend my federal tax return for this year? Please wait until your original return has been processed before filing the amendment.

To enter a 2025 Form 1099-R in your 2024 return please follow the steps below:

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. Answer "Yes" to "Did you get a 1099-R in 2024?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution plus earning or minus loss)
7. Box 2a enter $0 since you had no earnings
8. Box 7 enter J and P
9. Click "Continue"
10. On "Is the IRA/SEP/SIMPLE box on this 1099-R checked?" screen answer "No, the box is blank"?
11. On the "Which year on Form 1099-R" screen say that this is a 2025 Form 1099-R.

Please be aware, code P will say in the drop-down menu "Return of contribution taxable in 2023" but you can ignore that since the follow-up question will tell TurboTax that it will be taxable in 2024.

Also make sure you indicate in the IRA contribution interview that you withdrew the excess contribution by the due date:

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “Roth IRA”
4. Enter the Roth IRA contribution
5. Continue until the penalty screen and enter the excess contribution amount withdrawn.