1099-R Coe J, P

[Colmatt]

1099-R Code J,P 

Client took contribution to Roth IRA out before filing last year.  This year got this 1099-R and it has taxable amount $1265.  I see P is " Return of Principle taxable in 2020".  Do we need to amend 2020? 

Thanks, Sandy

[rbynaker · Accepted solution]

Probably.

I'm usually the one who tells the client they have an excess contribution so I'm always proactive in working with the client/custodian to figure out how much earnings have to be removed and include that amount prospectively on the current year return.  Then when the 1099-R arrives next year I just match it up and stick it in the file.

Rick

[Just-Lisa-Now-]

hey Rick, I have this situation, they pulled the excess out, but the account actually lost money while it was in there...so nothing to report and nothing to deduct, right?

[rbynaker]

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@Just-Lisa-Now- wrote:
hey Rick, I have this situation, they pulled the excess out, but the account actually lost money while it was in there...so nothing to report and nothing to deduct, right?

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Correct.  IIRC there's some adjustment to basis that may need to be made (and may never be relevant).  i.e. if your excess contribution was $6K and to correct it you took out $5K you have to remove $6K from the basis calculation.  Check me on that though, I think it's in the 8606 instructions somewhere.  I don't remember where but you'll need to tell PS this somewhere so it doesn't compute a penalty on the $1K that wasn't taken out because it was lost.