1099-R code PJ

[Colmatt]

2022 put 7000 in Roth, but not eligible.  Remove Roth prior to filing.  2023 Received this 1099-R coded PJ showing taxable return and early withdrawal.  Did not include anything on 2022 return.  Anything need to be amended to show not taxable and not early withdrawal?

[qbteachmt]

Should be P and 8. Earnings are taxable, of course.

[Colmatt]

In this case there were no earnings, losses actually.  In other cases, we put any earnings in the year overfunded.   What to do about wrong code? 

[Colmatt]

P is 'Return of contribution taxable in 2022"

8 is "Return of contributions taxable in 2023"

I was more worried about J "Early distribution from Roth"

[qbteachmt · Accepted solution]

You didn't put this under which program you are using. Yes, this is early, because it didn't meet the 5 year rule.

Yes, code 8 for 2022 would be "put in, in 2022, for 2022, and removed in 2022." Your taxpayer removed it in 2023. Without any earnings, there isn't any additional penalty or tax, then. It's not early if it didn't have earnings, in other words.

Remember that earnings are Net attributable; are these the only funds that were in that/all Roth account(s)? You might want to read:

https://www.investopedia.com/what-to-do-if-you-contribute-too-much-to-your-roth-ira-4770686

Form 5329 is where you deal with penalties and exceptions. Try these help articles:

https://accountants.intuit.com/support/en-us/help-article/form-1099-r/entering-form-1099-r-proseries...

https://accountants.intuit.com/support/en-us/help-article/retirement-benefits/common-questions-form-...

I assumed you were describing that both the contribution and the earnings were taken out timely.

[Camp1040]

It is coded a P and J because it is, does the penalty calculate, I wouldn't think so since Additional tax on corrective distributions of excess contributions has been elimated. It should apply to a roth.

[Colmatt]

Proseries program. Thank you for the great information.  It seems from all this I am ok with how it is coded.  At the bottom of the 1099 I can check the box, IF J, check if qualified distribution, because with no earnings so not really early distribution Think that's ok?

[Colmatt]

No penalty calculated so seems ok.

thank you for helping

[qbteachmt]

"because with no earnings so not really early distribution Think that's ok?"

Keep in mind that the 1099-R is for money Out. Then, you use the worksheet and code for what happened to it. The issuer of the 1099-R doesn't always know what happened to the money after it is distributed, or even why it was distributed when it is a request such as for medical costs or first time home buyer. That's why there is due diligence for Form 5498 when your taxpayer tells you they did a rollover or conversion, so you see the money In side of those events.

If you see what applies, you did it fine.

[Colmatt]

Makes total sense, Thanks.