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Old 03-04-2015, 09:50 PM
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excess IRA contribution

hi
I made an excess contribution of $2500 to my ROTH IRA in FEB 2014 while doing my 2013 returns. While working on my return i realized I was ineligible to contribute to ROTH IRA. I immediately withdrew the $2500 from ROTH IRA.
There was no captial gains etc no change in value of the acccount -as I withdrew it almost immediately the next day.
Now i have a Form 1099 R with Distribution code J and taxable income not determined.
this is causing an increase in my 2014 income by $2500 - how do i avoid this?



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Old 03-05-2015, 03:39 AM
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it means Early distribution from a Roth IRA, no known exception.i guess
the incident can be the result of incorrect instructions or miscommunication between IRA owner and custodian, resulting in erroneous 1099-R reporting. I guess you need to call them and tell them and they may amend your erroneously coded 1099-R.

In general, there is a 6% tax you’re required to pay each year the excess contribution remains uncorrected.as you find that your contribution to a Roth IRA was improper or too large, and you can avoid the 6% penalty tax by taking the money out. Relief from the penalty is available only if you receive a distribution from the IRA on or before the due date (including extensions) for filing your return for the year of the contribution; The distribution includes the amount of the excess contribution and the amount of net income attributable to the excess;but this is not your case as you have no income earned in the r-ira acct. Also, the earnings that you take out of the account will be taxable as income and (unless you’re over age 59.5 or you meet one of the other exceptions) subject to the 10% penalty for early distributions of earnings from a Roth IRA.



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Old 03-05-2015, 06:45 PM
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thanks for the reply. talked with my custodian - they say it is a miscommunication. won't correct the form.

i guess I can correct it myself and file a paper return with form 4852 with an explanation and proof of the correction attempt with the custodian?
the corrected code for form 1099-R in this case of excess contribution should be 8 -- is that right?



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Old 03-05-2015, 07:34 PM
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Quote:
Originally Posted by Wnhough View Post
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You who receive incorrect 1099-R form are required to report the errors and file amended tax return, if necessary. Businesses and pension plan administrators that file incorrect returns must amend their forms and send them to recipients and to the IRS; you subsequently realize that you erroneously filed your return, must correct your errors as soon as you discover them. To correct a previously filed 1099-R form, you must file a new or corrected Form 1099-R. If you filed an electronic return, you have to file an amended return . you are required to amend your previously filed tax return or request a new Form 1099-R from payers. To file an extension, you must file an automatic request to extend time using Form 4868. The IRS recommends that you report incorrect information on your original 1099-R form to your payer and ask for corrected form. Payers are required to provide their original 1099-R form to recipients by Jan. 31. The IRS will assist taxpayers who have not received their original or amended returns by Feb. 14 by contacting payer and requesting new or amended form. In the interim, the IRS can send payees substitute forms if they have not received their original forms or allow them to use IRS Form 4852 to file their taxes without their amended tax forms.aslongas you have already filed your tax return based on incorrectly filed 1099-R form can file IRS Form 1040X within three years from the dateyouoriginally filed your tax returns or from two years of your income tax payments, whichever occurs later. Recipients of amended form must submit their amended 1099-Rs form when filing amended tax returns.



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