how to file form 5329 for excess contribution Roth IRA 2024,withdraw the contribution & earning

smart12
smart12 Member Posts: 1 Newcomer
in Retirement Income

My husband contributed of $7000 to his Roth IRA 2024 in 2/22/24 but our income was over the limit. So he sold and withdrew $11k of his contribution and earning on 3/21/25. When I file tax, freetaxusa website said I need to fix the withdraw amount (it can not be over the contribution of $7000). How can I file tax in this case? Please help me, thank you so much.

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Answers

  • WrenD
    WrenD FreeTaxUSA Agent Posts: 36

    Dear Smart12,

    Thanks for your question. 

    To reflect this in the 2024 software, you will do the following:

    1. Report the $7,000 contribution by going to the Deductions/Credits tab, then to IRA Contributions.
    2. Answer yes to the question that asks "Did you make traditional or Roth IRA contributions during 2024?"
    3. Continue to the next screen and enter $7,000 in the Roth contributions box.
    4. Continue 2 more screens where it will ask "Did you withdraw any contributions?” Answer yes, that you did withdraw, and enter $7,000.
    5. The next screen will ask for the value of the IRA as of December 31, 2024. Enter that amount, which can be found on Form 5498 that you would have received from the company that holds the IRA.

    That is all the reporting necessary for the 2024 return at this time. Since you indicated you withdrew the amount, you will not receive a penalty.

     In 2026, you will receive a Form 1099-R (code P in Box 7) reporting the $11,000 distribution. At that time, you will amend your 2024 return to report this. You do so by going to the Income tab, then to Retirement Income-1099-R. Any amount that is earnings, which sounds like $4,000 in your case, will be taxable. The $7,000 will not be taxable.

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