Excess Roth IRA contributions

ZRocky

I contributed too much to Roth, filled out a request from, had the contribution removed as well as the earnings. FreeTax asked if I removed it, I said yes. Do I claim the earnings now? If so, how and where? Or do I wait until I get a 1099-R and amend my 2023 taxes?
FreeTax did not include a form 5329 to reflect my Roth removal, is this form needed or is it enough to tell FreeTax that I contributed and then removed it?

Henry

Hello ZRocky, if you had excess Roth IRA contributions, you should report the contributions on the IRA Contributions screen and then indicate that you removed the excess (which it sounds like you have already done). Doing this will prevent Form 5329 from being generated and the penalty from being applied.

This withdrawal should be reported to you on a Form 1099-R, but you won't receive the 1099-R until next year if the excess contribution and earnings were withdrawn in 2024. So even though it needs to be reported on your 2023 tax return, you
won't be able to do that until you receive the 1099-R from your plan administrator.

For now, you will just need to file your tax return. Then when you receive the 1099-R in 2025, you can come back and amend your 2023 return to include the 1099-R information. At that time, you will report the amount of the distribution of the returned contributions you made in 2023 and any related earnings on your Form 1040, line 4a. Only the related earnings will show on line 4b.

ZRocky

Thank you for the clarification. Much appreciated!