Withdrawn Roth IRA contribution

Forum|Forum|6 years ago
May 9, 2020
2 replies
27 views

Hi,

In 2018 I opened a Roth with Vanguard using $6,500 from my brokerage account to fund it. I realized later that our modified AGI was too high for that year, and the holdings for the account, minus $93.53 in tax withholding, and I contacted Vanguard and the account holdings were swept back into the brokerage account in March before the 2018 tax filing deadline. But this has still generated a 1099-R from Vanguard with the box 7 codes of P and J, and I can’t come up with a way of accounting for the form without it being considered as a $6,593.53 distribution. Any idea how to do this in TurboTax without having to call the already taxed money a distribution?

Thanks for any light you can shed,

David

macuser_22

Alumni - Champ

A 2019 1099-R with a code "P" or "JP" in box 7 is taxable in 2018, not 2019

You must amend 2018 to report it. The 2018 1099-R interview will say that code P means "Return of contribution taxable in 2017", but the interview will ask if this it a 2018 1099-R or a 2019 1099-R. Say 2019 and the "taxable in 2017" becomes "taxable in 2018" (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.

Of box 2a is zero (no earnings) then there is not reason to amend or report it at all because it will do nothing.

**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.**