IRA Contribution Return

Submitted by Rawal Prashant on Fri, 2014-04-04 20:55

My income was higher then the Roth Contribution limit so I got back the $10,000 (5000 each for me and my wife). I got a 1099R. Do I have to report that on my tax return or I just ignore that. Can someone help?

Prashant



Submitted by Alan - IRA critic on Fri, 2014-04-04 21:17

Do you have a 1099R for it yet? What year were these contributions FOR and what year did you make them in? Was there an earnings calculation made which would have resulted in you receiving back somewhat more or less than the 5,000?

Submitted by Rawal Prashant on Fri, 2014-04-04 21:24

Yes I do have a 1099R for both me and my wife. It was for last year. After the earnings calculation it was determined that I do not qualify and the contribution is excess contribution.  The 1099R code shows JBDoes that mean I have to report this as income?

Submitted by Alan - IRA critic on Fri, 2014-04-04 21:48

  • There is no JB coding combination, it is J8, which is the coding for a distribution of a 2013 contribution. If the amount in Box 1 is exactly 5,000 and that is what you contributed, it means there was no earnings or loss, so you must have had the contribution invested in just cash.
  • And if the above is correct, there is no tax or penalty on this distribution because you recieved no earnings. Box 2a would show nothing. This situation is not reported on any form, but you would enter 10,000 on line 15a only of FOrm 1040. The IRS would like an explanatory statement regarding your contribution and corrective distribution, but since they have the 1099R that explains that you corrected it, you can get by without the explanatory statement.

Submitted by Rawal Prashant on Fri, 2014-04-04 23:03

I understood everything that you said except the last part. In there you have stated that ‘since I have a 1099R that explains you have corrected it’.Are you referring to code J8? Does that mean it has been corrected?I will be electronically filing and yes I had the contribution invested in cash.Have it understsood it correctly?Thank you so much for the help. 

Submitted by Alan - IRA critic on Sat, 2014-04-05 00:15

Yes, that is correct. The J8 means that a corrective distribution has been made. Nothing in Box 2a of the 1099R means there is no taxable amount to report.  You have corrected the excess contribution.

Submitted by Rawal Prashant on Sat, 2014-04-05 01:27

Thank you so much.

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