Question About Filling Out Form 1099-R for Excess Contribution Removal

[necro]

I have a question regarding how to fill out Form 1099-R for the removal of my excess Roth IRA contribution.

Here is the timeline of events:

January 2024 – Contributed $7,000 to my Roth IRA.

December 2024 – Recharacterized $8,539 from my Roth IRA to a Traditional IRA.

March 2025 – The excess contribution amount was determined to be $7,000. The total applicable earnings/loss for the computation period was (-$250.06), and the total amount to be returned to me was $6,749.94.

I received a 1099-R for the recharacterization in January 2025, and I will received a separate 1099-R for the excess contribution removal in early 2026. Instead of amending my 2024 tax return, I plan to report this on my 2024 tax return.

Here are my questions regarding how to properly fill out Form 1099-R for the excess contribution removal:

Box 1 – Should I enter $7,000 (the original excess contribution amount) or$6,749.94 (the amount actually returned after accounting for the loss)?

Box 2a – Since I had a loss, should I enter $0?

Box 7 – Should I use codes J and P?

I would appreciate any clarification on how to report this correctly.

Fidelity informed me that although there is still a remaining balance in my Traditional IRA after the excess contribution removal, that portion is not considered an excess contribution and therefore was not withdrawn. They also stated that as long as the remaining amount stays in the Traditional IRA and is not withdrawn, it does not affect my tax return.

Is this correct?

Thank you!

[DanaB27 · Accepted solution]

You will get a 2025 Form 1099-R with code P and 1 since you recharacterized he contribution and therefore removed the excess from the Traditional IRA.

To create a 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 minus loss)
7. Box 2a enter $0
8. Box 7 enter P and 1
9. Check the "IRA/ SEP/ SIMPLE" box
10. Click "Continue"
11. On the "Which year on Form 1099-R" screen say that this is a 2025 1099-R.
12. Click "Continue" after all 1099-R are entered and answer all the questions.
13. Continue until "Did you use your IRA to pay for any of these expenses?" screen and enter the amount of earnings under "Corrective distributions made before the due date of the return".

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

To clarify, was your Traditional IRA empty before you recharacterized the Roth IRA contribution as a Traditional IRA contribution? If you requested the return of the excess $7,000 contribution plus earnings then the financial institute should remove the correct amount and consider the earnings or losses. Please note, since you recharacterized the Roth IRA contribution the earnings are deemed to have been earned in the Traditional IRA. Maybe you need to check with Fidelity if they are aware of this fact and considered this when they processed the return of excess contribution plus earnings.

[necro]

Thank you for your response @DanaB27 .