How to enter 1099-R for Over Contribution

[memrick]

I have ready many articles on the community about this subject, but I am still unclear about the correct way to handle my 1099-R(s) that I received this year for excess contribution on my 2022 taxes.

I over contributed  to a Roth 401K and Roth IRA in year 2022. In both cases, the excess contributions were removed in a timely fashion before the tax deadline in 2023 and neither funds had any gains to report. I did not have a 1099-R to enter when I did my 2022 taxes. Now, I have received the two 1099-R(s) - a 1099-R that has code PB for the correction of the Roth 401K and another 1099-R that has code PJ for the correction of the Roth IRA. (No other 1099-R received as both were a loss). Both show no taxable amount in box 2a and box 4.

Do I need to amend my 2022 taxes to report these 1099-R even though there is not taxable income and it shouldn't change my taxes as far as I know? Also, just to make sure... I don't have to do anything on my 2023 taxes this year with these 1099-R(s), correct?

[DanaB27 · Accepted solution]

Yes, you do not have to enter anything on your 2023 tax return.

No, you do not need to amend your 2022 tax return to include the 2023 Form 1099-Rs received because they will not change your tax return. TurboTax would only add an explanation statement for the Form 1099-R with code PJ since you did not have any earnings (only earnings would be taxable). A Form 1099-R with code BP won't make any changes to your return since a excess deferral to a designated Roth account won't be added to the wages.

[memrick]

Thank you!  I appreciate you taking the time to answer my question and give your input.  This is exactly the information I was hoping to understand more clearly. 

[mizzle]

@DanaB27 

Hi, I have the same situation, made an excess IRA contribution in 2022 and corrected it before filing my 2023 taxes. Just got my 1099-R for the 2023 tax year. I understand from your response that 1) I don't need to amend my 2022 return, and 2) I don't need to enter anything on my 2023 return.

I wanted to double check what I should do in TurboTax. Before finding this discussion thread, I had manually entered information for the 1099-R. Since I had code PJ in Box 7, TurboTax told me that "it looks like you may need to pay extra taxes on this distribution" and "Looks like you may need to amend your 2022 return". I just want confirm that both of these statements are in fact not correct. 

Should I remove/delete the 1099-R from my 2023 return altogether? Thank you.

[fanfare]

"it looks like you may need to pay extra taxes on this distribution" 

TurboTax should check Box 2a for a non-zero amount before putting out that statement.

@mizzle 

[mizzle]

@fanfare Yeah, it was confusing as there is nothing in Box 2a. In fact the only filled boxes are 1 and 7.

[DanaB27]

Yes, you do not need to amend your 2022 return . You can delete the 2023 Form 1099-R from your 2023 return but you don't have to since the code P tells TurboTax to ignore the income on the 2023 return.

@mizzle 

[mizzle]

@DanaB27 

Thank you for the clarification. For the avoidance of doubt, I just want to ask regarding this other thread  I found (among others), in which you advised another user that they can wait to get the 1099-R the following year, and then amend the prior year's return:

https://ttlc.intuit.com/community/taxes/discussion/excess-contributions-on-roth-ira/00/2521357

Was your advice in that thread solely because they had earnings on the excess contribution and therefore needed to pay taxes in the year of the contribution? Is my situation different because I didn't have earnings, and that's why I don't need to amend my 2022 return? Thank you.

[DanaB27]

Yes, the user in the thread had earnings that needed to be reported. You do not have any earnings and therefore, you don't have any taxable income to add to your 2022 return. All that TurboTax would do is add a explanation statement but your return would not change.

@mizzle