401k rollover to Roth IRA and excess contributions

ctaxhelp123456
ctaxhelp123456 Member Posts: 1 Newcomer
in Filing my taxes

Hi! This is my first time trying to do my taxes and putting money into my Roth IRA and I can't seem to figure out how to answer a couple of questions in the Roth IRA category. Thank you so much in advance!! :(

To start, I did a 401k roll over to my Roth IRA in 2025. Therefore, I received a 1099-R (box 1: 8,091 ; box 7 distribution code: G ; and unchecked IRA/SEP/SIMPLE box).

Should $8,091 be in box 5b of form 1040?

In 2025, I contributed $1,000 to my 2025 Roth IRA. Then, in 2026 I contributed an additional $2360 to my 2025 Roth IRA.

I have a small business, and I ended up making a profit of $2494 minus -$177 (SE tax) so my qualified business income comes out to $2317.

A day later I realized I exceeded Roth IRA based on income, so I withdrew $1050 and got this email from fidelity:

"Your excess contribution amount was $1050

Your total applicable earnings or loss for the computation period was $2.99

The total amount to be returned to you is $1052.99."

(From what I understand I will pay taxes on the $2.99 for next years taxes)

What do I enter in "Enter any Roth IRA contributions you made during 2025:"

"Did you withdraw any Roth IRA contributions by the tax filing due date?"

"Enter any 2025 Roth IRA contributions you withdrew:"

Thank you once again!

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  • kiarab
    kiarab FreeTaxUSA Agent Posts: 262 image
    edited March 21

    Hello ctaxhelp123456,

    You mentioned that the transfer from 401(k) to Roth 401(k) was done without a taxable amount showing up in line 5b. This would ring true with the box 7 code G which signifies a rollover transaction. Please follow up with the Financial Institution to see why it isn't triggering a taxable event that usually happens when a deductible type contribution account is converted to a Roth type contribution account.

    As for your questions about your excess Roth IRA contributions, you will want to:

    1. Report the full amount you contributed to the Roth IRA when it first asks how much you contributed to a Roth IRA. Please follow the menu path Deductions/Credits > Common Deductions/Credits > IRA Contributions to start.
    2. If you contributed more than you should have, the software will tell you that you have an excess Roth IRA contribution
    3. Enter the amount of contributions you withdrew, which based off of what you said is $1,050. Your earnings should not be part of your contributions withdrawal.

    And as you said, your earnings will be reported on a 1099-R that you should receive next year since you didn't withdraw your excess until this year. Please see this community article for more information that you can add to your tax return to report the excess contribution correctly:
    https://community.freetaxusa.com/kb/articles/263-what-if-i-overcontribute-to-my-roth-ira?utm_source=community-search&utm_medium=organic-search&utm_term=Excess+IRA+contribution+workaround  

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