Traditional IRA Excess Contribution

[taggit]

I have excess Traditional IRA contribution in 2022.  I had the shares that I bought transferred to a non-IRA account, but I took a loss.  How do I fill in a 1099-R showing the loss?  Also, TurboTax is asking how much I removed from my IRA, and when I put in the lower amount it charges me as if I did not remove all of the excess contribution.  How can I fix this?

[DanaB27]

You will enter on the Penalty Screen in the IRA contribution interview that you removed the full excess contribution amount (ignore the loss).

1. Click on "Search" on the top right and type “IRA contributions”
2. Click on “Jump to IRA contributions"
3. Select “traditional IRA”
4. Continue until the penalty screen and enter the excess contribution amount withdrawn.

To confirm you removed the excess contribution for 2022 in 2023?

If you withdrew a 2022 excess contribution plus earnings in 2023 before the due date, then you will get a 2023 Form 1099-R in 2024 with codes P and 1. This Form 1099-R will have to be included on your 2022 tax return and you have two options:  

• You can wait until you receive the 2023 Form 1099-R in 2024 and amend your 2022 return or
• You can report it now in your 2022 return and ignore the 1099-R when it comes unless there is Box 4 Federal Tax withholding and/or Box 14 State withholding. Then you must enter the 2023 Form 1099-R into the 2023 tax return since the withholding is reported in the year that the tax was withheld. The 2023 code P will not do anything to the 2023 tax return but the withholding will be applied to 2023.

To create a Form 1099-R in your 2022 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 2022?"
5. Select "I'll type it in myself"
6. Box 1 enter total distribution (contribution minus loss)
7. Box 2 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 2023 1099-R.

[taggit]

What would be the address of TD Ameritrade and the Federal ID number for the 1099-R?

[DanaB27]

You will need to check with TD Ameritrade to get their address and Federal ID number.