Regarding return of excess contribution ROTH IRA

[terry00005]

Hi,

We maxed out our ROTH IRA contribution in 2025. Now as we are about to file our tax we found out that the MAGI is slightly more than 236,000. We are married filing jointly. 

Question 1,  since we exceeded the MAGI, we have to reduce our ROTH IRA contribution for 2025 by withdrawing the excess plus the NIA, is it correct that the NIA(net loss/earnings) has to be added to our income section(turbo tax) on our tax filing? If yes, is that in the  IRA early withdrawals section, anywhere else? However, we believe we need a 1099-R from our custodian but won't receive it until later. Would we just have to add the NIA regardless without the 1099-R form?

Question 2, is there a penalty for withdrawing the excess since we are under 59 yrs old? Do we have to worry about this number on our tax filing for 2025 tax year?

Question 3, since we already exceeded the 236,000 MAGI, by withdrawing the excess contribution plus NIA, it would mean our MAGI will increase slightly again, do you have a formula how to calculate the final excess contribution plus NIA?

[MarilynG1]

When you entered your Roth IRA contribution in TurboTax, the program tells you the excess amount, and asks it you withdrew it before the deadline.  You will then create a 1099-R to enter with Box 1 being the excess contribution amount, and Box 2a being the Earnings amount (if you know that amount) and Codes P and J in Box 7.  When you receive a 1099-R in 2026, it will have the same info, plus tax withheld, which will be included in your 2026 return. 

You won't incur a penalty and only the earnings will be taxable income.  You won't have an early withdrawal penalty for withdrawing the excess, but may for the earnings withdrawn. The earnings amount will raise your MAGI, but withdrawing the excess will not.  

Here's more discussion on Excess Roth Contributions.

@terry00005 

[terry00005]

Awesome. Thank you so much!

[terry00005]

Hello again, so we tried in turbo tax following the steps below, we follow and answer all the questions but we never bump into question asking if we withdraw before deadline?  It just showed us the total excess amount and the penalty? Are we missing something?

1. Go to Federal
2. Select Deductions & Credits
3. Scroll to Retirement and Investments
4. Click Start/Update next to Traditional and Roth IRA Contributions
5. Choose Roth IRA
6. Enter your contribution amount

[RobertB4444]

No, you followed the correct steps.  Go ahead and create the 1099-R that takes care of the withdrawal that you had with the codes P and J as @MarilynG1 says above and that should take care of the problem.