1099-R codes Removal of excess for Traditional IRA contributions

Submitted by Garrett Oakley on Fri, 2018-01-05 18:58

I can’t seem to find a clear answer on this but when a person removes an excess Traditional IRA contribution after the tax filing deadline, would the code used on the 1099-R be 1 or 7 depending on age?

Understanding that they will need to file 5329 and pay the 6% excise tax for each year the excess was left in the IRA.



Submitted by Alan - IRA critic on Fri, 2018-01-05 19:49

  • Yes, 1 or 7 depending on age. The custodian should be told of the type of distribution this is, and would then leave box 2a on the 1099R blank and check the “Taxable Amount not determined” box. This would allow the taxpayer to not report any taxable income if they did not take a deduction for the year of contribution, no matter how far back. Otherwise, if the custodian was not told they would enter the full distribution amount in 2a which could result in double tax if the taxpayer did not take a deduction.
  • I suspect there are considerable compliance problems when this situation exists.

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