Hi  I have a Roth IRA account and have made excess contributions to it between year 2013 - 2018.    Last June I file an excess contribution removal form with my custodian and removed all the excess contributions and paid a penalty to IRA.   This year I got a 1099-R for year 2020 with code J - early distribution.   With this code I am going to pay tax on this amount.    My custodian explained this is the correct code because I withdrew money from Roth IRA before age 59.5.   I understand when one makes a legit contribution and takes it out of Roth IRA early, it should be taxed.   In my case, the amount is an excess contribution that shouldn't have been there in the first place. Taking it out is an act of correction.   Is it really considered as an early distribution(Code J) for my situation? ... View more

Hi   I had been making contribution to Roth IRA while living abroad and taking Foreign Income Exclusion. I realized I shouldn’t have done that after a couple of years. I filed an excessive contribution removal form with my custodian and took the money out of Roth IRA. I used form[tk] to pay the penalty to IRS. I did it in June after filing my tax return. This year I received a 1099-R and upon entering it into Turbo tax I was asked to pay tax on the amount I removed.   Box 7 has P. I look up what P is and the mighty Internet gave me this: Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2020.   From my interpretation, it did recognize the amount is an excess contribution, and it’s considering taxable when I remove it.   I know Roth IRA is taxable when one withdraws money from it. In my case, I was correcting an amount that shouldn't have been there in the first place. Why is this amount taxable? ... View more