Withdrawing excess Roth IRA contribution

Forum|Forum|5 years ago
April 16, 2021
12 replies
103 views

I deposited $6,000 into my Vanguard Roth IRA in early 2019. I also got married in late 2019 and when we filed taxes for 2019, we realized that our joint income was too high. When we realized that my Roth IRA contribution was not allowable, we withdrew $6500 (the $500 being the estimated interest generated from the original Roth contribution). I believe we did not report the Roth IRA contribution on our 2019 taxes. If I understand there is a penalty for my Roth IRA mistake. Can anyone indicate how I take this into account for my 2020 contributions?

Thank you!

TurboTax Premier Online

Best answer by ThomasM125

If the distribution was not reported on a form 1099-R, as it should have been, you can create a substitute form 1099-R to report it, by amending your 2019 tax return.

To report the earnings on the contribution, you should enter a Substitute form 1099-R. You will see an option for this when you see the screen Tell us Which 1099-R You Have.

Enter in box 1 the distribution amount. In box 2 enter the earnings. Enter code "8" and "T" in box 7.

ThomasM125

Level 15

If you took the distribution in 2020, you should have received a 1099-R reporting the distribution in 2021, recently. That form should have a code "P" in box 7 which would indicate that the distribution should be reported on your 2019 tax return.

So, you need to amend your 2019 tax return and report the 1099-R on it. You should have the taxable portion of the distribution listed in box 2 on the form 1099-R.

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CandP507Author

Level 2

@ThomasM125 Thank you for your response. I did not get a 1099-R and I realize that I think I inaccurately described my situation. My apologies!

I've rewritten it here:

I deposited $6,000 into my Vanguard Roth IRA in Jan 2019. I also got married in late 2019. Joint income was too high for Roth IRA contributions. I withdrew $7700 from my Vanguard Roth IRA in April 12, 2020 (the number may be high because I may have opted to withhold 33% for federal tax and 10% for state tax, but unfortunately I don't have any clear paperwork on what I did other than a transaction history). The Roth IRA contribution was not reported on my 2019 taxes (not listed on Section C: Adjustments to Income; 19: IRA deduction). The only confirmation that I made this withdrawal from my Roth IRA is through transaction history. I have a Form 5498 showing the initial $6000 contribution. I have not received any other paperwork.

Still unclear how to resolve this for good, thank you so much!!!

macuser_22

Alumni - Champ

@CandP507 wrote:

@ThomasM125 Thank you for your response. I did not get a 1099-R and I realize that I think I inaccurately described my situation. My apologies!

I've rewritten it here:

I deposited $6,000 into my Vanguard Roth IRA in Jan 2019. I also got married in late 2019. Joint income was too high for Roth IRA contributions. I withdrew $7700 from my Vanguard Roth IRA in April 12, 2020 (the number may be high because I may have opted to withhold 33% for federal tax and 10% for state tax, but unfortunately I don't have any clear paperwork on what I did other than a transaction history). The Roth IRA contribution was not reported on my 2019 taxes (not listed on Section C: Adjustments to Income; 19: IRA deduction). The only confirmation that I made this withdrawal from my Roth IRA is through transaction history. I have a Form 5498 showing the initial $6000 contribution. I have not received any other paperwork.

Still unclear how to resolve this for good, thank you so much!!!

Then contact Vanguard for a copy of the missing 1099-R. They were required by law to issue it to you no later than Jan 31, 2021 for a 2020 return of contribution. If you have an online account with them it will probably be available online. Form 5489 is information only and does not go on a tax return.

**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.**