Excess Roth Conversion

Submitted by Beza Asrat on Tue, 2024-01-09 19:20

I had a Roth IRA contribution made in 2021 but that shouldn’t not have been made because compensation is over the income threshold so requested a corrective distribution in 2022 and all the funds were distributed before 10/15/2022 (extended deadline). Then when i prepare 2022 tax return received a 1099-R with code 8j on box 7 and box 2a no taxable income and reported the $6,500 in the tax return for 2022 form 1040 line 4a.
Then recently in December 2023 I received a corrected 1099-R with code PJ on box 7 and a letter explaining i need to amend the impacted tax year.
So per my quick research for code “Pj” looks like i need to report the corrective distribution on my 2021 return instead of 2022 even though the corrective distribution happened in 2022 for 2021 tax year? So should i amend 2021 to show the $6,500 distribution and also amend 2022 to remove the gross distribution $6,500 that i have reported on my tax return since code “pj” says need to amend prior year return even though the 1099R is for 2022? Or only this applies if you have taxable amount on box 2a. Both 1099R corrected and original doesn’t show taxable amount and there will be no bottom line change if i amend 2021 and 2022. If you can give some insight that would be great. Thank you.



Submitted by David Mertz on Tue, 2024-01-09 20:11

  • Based on your assertion that the contribution was made in 2021, the 2022 Form 1099-R should have had codes P and J, not 8 and J, so the corrected form correctly replaces the original.
  • If the taxable amount in box 2a is zero, there is nothing to report on your 2021 tax return.  Your 2021 tax return should already have included an explanation of the recharacterization, but that might have been included with your 2022 tax return based on the erroneous Form 1099-R with codes 8 and J.
  • At this point there is no point in taking any action as a result of the corrected Form 1099-R.  Just provide the details to the IRS if they ever question the recharacterization.

Submitted by Beza Asrat on Tue, 2024-01-09 22:58

Thank you so much for the response. In 2021 and 2022 tax return i didnot include an explanation about the recharacterization (corrective distribution). In 2022 i just reported the distribution amount per form 1099R. Does this mean do i need to amend to include the explanation only on 2022 tax return? Thank you.

Submitted by Alan - IRA critic on Wed, 2024-01-10 00:26

I wouldn’t amend just for an explanatory statement. If the IRS is confused about your reporting of the 1099R forms issued, they can send you an inquiry. Usually they can figure out what you did without the statement.

Submitted by Beza Asrat on Wed, 2024-01-10 21:39

Thank you so much!!

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