Early disabled Roth IRA distribution

Avs19 · ‎04-16-2023

Hi,

My client recieved a 1099R, code J for an early distribution he made last year. According to publication 590-B, the distibution is not subject to tax or penalty. Does anyone know how to notate this in Proseries?

Thanks

taxshack · ‎04-16-2023

It is subject to penalty unless they had basis. You want to find out the cumulative basis and enter it on the IRA Info worksheet.

Preparing taxes is not my life, but my life is amazing because I prepare taxes.

Avs19 · ‎04-16-2023

30K distribution with 10K in basis.

Am I missing something in the IRS publication 590-B where it says that if you're disabled, than an early distribution from a Roth IRA pays no tax or penalty?

Thanks

jeffmcpa2010 · ‎04-16-2023

Does entering the exempt amount in Question 1, column a line c of form 5329 work?

Avs19 · ‎04-16-2023

That takes care of the penalty but it's still taxing the 30K. I'm not too concerned about the basis at this point because it's only 10k.

taxshack · ‎04-16-2023

Sorry I missed in the title that it said disabled. Disregard what I said before. I think you have to go to the 1099-R worksheet and check the box that is below 19-1 that says to check if Qualified.

Preparing taxes is not my life, but my life is amazing because I prepare taxes.

View solution in original post

Avs19 · ‎04-17-2023

Tried that but it doesn't do anything

Avs19 · ‎04-17-2023

Actually, that did do it. I just had to check the box that he openned the IRA account before 2018.

Thanks for your help!

taxshack · ‎04-17-2023

Yay! I'm glad that was the answer.

Preparing taxes is not my life, but my life is amazing because I prepare taxes.