Solved: Roth IRA Excess removal - 2019
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Level 2

Roth IRA Excess removal - 2019

Hi,

 

I have seen few question similar to this, but not exactly what I needed. So do not write it off as duplicate.

I made Roth Contribution in 2019. I had to withdraw the contribution + capital gains in January 2020 due to income limits. My brokerage mentioned that they will issue 1099-R for this in 2021.

 

I understand from earlier questions that I have to file 1099-R as if I already received one. While trying to do that here are some questions I have:

  1. For Box 7, the suggestion is to use codes P and J. Why use P (Return of contribution taxable in 2018) while code 8 (Return of contribution taxable in 2019) seems correct?
  2. For the question "Which year on form 1099-R?" I have to select 2020 and not 2019. Is that correct?
  3. Do I also have to file Form 4852 by selecting "Need to prepare a substitute 1099-R"?
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Highlighted
Level 15

Roth IRA Excess removal - 2019


@Tax20203 wrote:

Hi,

 

I have seen few question similar to this, but not exactly what I needed. So do not write it off as duplicate.

I made Roth Contribution in 2019. I had to withdraw the contribution + capital gains in January 2020 due to income limits. My brokerage mentioned that they will issue 1099-R for this in 2021.

 

I understand from earlier questions that I have to file 1099-R as if I already received one. While trying to do that here are some questions I have:

  1. For Box 7, the suggestion is to use codes P and J. Why use P (Return of contribution taxable in 2018) while code 8 (Return of contribution taxable in 2019) seems correct?
  2. For the question "Which year on form 1099-R?" I have to select 2020 and not 2019. Is that correct?
  3. Do I also have to file Form 4852 by selecting "Need to prepare a substitute 1099-R"?

You do not "have to" but it will save having to amend next year,

 

1) PJ  for  Roth.

2) 2020,

3) No.

 

A 2020 1099-R with a code "P" or "JP" in box 7 is taxable in 2019, not 2020

You must amend 2019 to report it. The 2019 1099-R interview will say that code P means "Return of contribution taxable in 2018", but the interview will ask if this it a 2019 1099-R or a 2020 1099-R. Say 2020 and the "taxable in 2018" becomes "taxable in 2019" (the year advances by 1 each year).

The returned contribution is not taxable, but any earnings reported in box 2a are taxable and also subject to an 10% penalty of you are under age 59 1/2.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

2 Replies
Highlighted
Level 15

Roth IRA Excess removal - 2019


@Tax20203 wrote:

Hi,

 

I have seen few question similar to this, but not exactly what I needed. So do not write it off as duplicate.

I made Roth Contribution in 2019. I had to withdraw the contribution + capital gains in January 2020 due to income limits. My brokerage mentioned that they will issue 1099-R for this in 2021.

 

I understand from earlier questions that I have to file 1099-R as if I already received one. While trying to do that here are some questions I have:

  1. For Box 7, the suggestion is to use codes P and J. Why use P (Return of contribution taxable in 2018) while code 8 (Return of contribution taxable in 2019) seems correct?
  2. For the question "Which year on form 1099-R?" I have to select 2020 and not 2019. Is that correct?
  3. Do I also have to file Form 4852 by selecting "Need to prepare a substitute 1099-R"?

You do not "have to" but it will save having to amend next year,

 

1) PJ  for  Roth.

2) 2020,

3) No.

 

A 2020 1099-R with a code "P" or "JP" in box 7 is taxable in 2019, not 2020

You must amend 2019 to report it. The 2019 1099-R interview will say that code P means "Return of contribution taxable in 2018", but the interview will ask if this it a 2019 1099-R or a 2020 1099-R. Say 2020 and the "taxable in 2018" becomes "taxable in 2019" (the year advances by 1 each year).

The returned contribution is not taxable, but any earnings reported in box 2a are taxable and also subject to an 10% penalty of you are under age 59 1/2.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

Highlighted
Level 2

Roth IRA Excess removal - 2019

Thank you for detailed reply. That clarifies.

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