How to report untimely Roth IRA return of excess contributions

[JacobMecina]

I made an excess contribution of $6500 to my Roth IRA in 2023. I didn't realize until 2025. I have since:

• Filed form 5329 for 2023 to pay the 6% penalty.
• Filled out form 5329 for 2024 to pay the 6% penalty (to be submitted when I submit the rest of my tax report). 
• Contacted Fidelity and had them do an untimely correction, which resulted in a withdrawal of the $6500 contribution (no earnings/loss needed to be included).

My question now is, how do I let the IRS know I no longer have excess contributions in my Roth IRA? Looking at Form 5329, it seems like I'd report this on Line 20, but the instructions say that this Line is generally the amount on Form 8606 Line 19 (plus any qualified distributions), which is for non-qualified distributions. I thought that since the return of excess was only for the original contribution (which can be done tax and penalty free for Roth IRAs) that this wouldn't be a non-qualified distribution. 

On the other hand, the email I got from Fidelity after requesting the untimely correction said the returned amount may be taxable and subject to penalty for the year it was returned (2025), so perhaps I was incorrect in my assumption that this wasn't a non-qualified distribution.

So I'm not sure how to proceed; any help would be greatly appreciated. 

[DanaB27 · Accepted solution]

The excess will resolve when you enter the 2025 Form 1099-R next year on your 2025 tax return. TurboTax will enter the distribution on your 2025 Form 5329 line 20 and this will resolve the excess contribution. This regular distribution is a non-qualified distribution if you are under 59 1/2. But will not be taxable since you can withdraw Roth contribution anytime, tax- and penalty-free. 

Next year on your 2025 tax return:

1. Login to your TurboTax Account 
2. Click on "Search" on the top and type “1099-R” 
3. Click on “Jump to 1099-R” and enter all your 1099-Rs
4. Click "Continue" on the "Review your 1099-R info" screen after you entered all you Form 1099-R
5. Answer "Owned Any Roth IRA for Five Years?" screen
6. Continue through the questions and make sure you enter the net contributions prior to 2025 on the "Enter Prior Year Roth IRA Contributions" screen (include the excess contribution amount in the net contributions.