Mistakenly contributed to Roth IRA

Caquis · ‎February 9, 2019

In January 2018 I have mistakenly contributed $11,000 ($5,500 for 2017 and $5,500 for 2018) towards my Roth IRA account. Right after I made these contributions, I realized that in my case the contributions would not give me a tax advantage so a few hours later I moved the $11,000 out of the Roth IRA account. Recently I received form F1099-R from my financial institution, and whilst box 2a is empty, box 2b is checked for "Taxable amount not determined". Surprisingly, when TurboTax imported the information on F1099-R, it seems that I am being heavily penalized (the "Federal Tax Due" went up substantially) for this situation. Has anyone faced a similar situation? If so, is there a way not to be penalized? By the way, box 7 shows Distribution code "J". Thank you in advance.

NCperson · ‎February 9, 2019

please pull up Form 1099-R in TT (go to FORMS VIEW) and review boxes 1 and 2a. Compare that to the paper copy you received. Do they match?

is it possible what was transmitted from the financial firm and what you received in the mail are different? Because that is what I read you are suggesting. if that download and the form are different, suggest calling your financial firm to discuss.

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NCperson · ‎February 9, 2019

please pull up Form 1099-R in TT (go to FORMS VIEW) and review boxes 1 and 2a. Compare that to the paper copy you received. Do they match?

is it possible what was transmitted from the financial firm and what you received in the mail are different? Because that is what I read you are suggesting. if that download and the form are different, suggest calling your financial firm to discuss.

atulkshirsagar · ‎March 10, 2023

Hi! were you able to resolve this issue? I have the exact same problem. I contributed to traditional IRA and within moments realized that it was wrong to contribute. So I pulled out the money and now I get form 1099-R.

I recall seeing a message from turbotax (while filing taxes with turbotax last year) that by immediately withdrawing money like that wont cause any tax event.

Please respond if you have solved this.

Thanks,

Atul

DianeW777 · ‎March 10, 2023

Based on your situation, you should not have received a 1099-R because there was no real contribution. However, you can enter zero as the taxable amount and keep all of your records to show you removed the contribution. I assume it's because you did not want to leave it because there was no tax advantage and tracking nondeductible contributions can be challenging.

Since the code in box 7 is not listed I used code 1, then selected taxable amount not determined and then was able to enter an explanation and the distribution was not taxed.