Withdrawing Excess Roth IRA Contribution

[GM45]

Hello and sorry, I am getting frustrated with the program but maybe it is my fault.

I have no earned income but I contributed 8k to a Roth IRA in January 2024. I now realize I cannot make any contribution.

I entered the Excess amount in TurboTax Deluxe and it calculated tax on this 8k in addition to money I withdrew from a Rollover IRA as spending money. I also indicated I was withdrawing that same excess 8k amount (will do it this year but before April 15, 2025). But it did not recalculate the tax I owe. What am I missing?

I believe I have to create a 1099-R to show the interest I made on that excess contribution so that this can be taxed?

Thank you very much.

Gerry

[MarilynG1]

If you indicated in TurboTax that you will withdraw your Excess Roth Contribution (plus earnings) before the tax filing date, you should not incur a penalty (or be taxed on that amount).

You can create a 1099-R to enter in TurboTax to report this, with Box 1 showing the amount of the Excess Contribution plus Earnings, and Box 2 showing only the Earnings amount. 

In Box 7, use Codes P and J.

When asked What Year is your 1099-R, enter 2025. 

Here's more info on Creating 1099-R to Report Excess Contribution and Earnings. 

[GM45]

Thank you Marilyn!

1. I am 69-years old. Is the J code then correct for me as it says "Early Distribution ....". I also own the Roth account for more than 5 years.

2. I don't understand the P code here as is says now "Return of Contribution taxable in 2023". I made the contribution in 2024 and therefore the earnings on it too in 2024. So wouldn't the earnings be taxed in 2024?

Thanks again,

Gerry