Hello Atlanta Tax Expert,


An excess contribution was made in Roth for 2020. Immediately on realizing it was excess contribution , the excess was withdrawn along with earnings. Fidelity has told they will issue a 1099 R only for 2021. Doubt is regarding if anything should be reported in 2020 return. Will the earnings be taxed for 2020 or will it be taxed in 2021 when it shows in the 1099 R.

Do advice

Was the withdrawal physically done in 2020 or 2021?

It was done in 2021

Then you report nothing on your 2020 return and address it on the 2021 return.

Thanks so much. So next year for 2021 Return a 1099 R is received. We enter
income earned on the excess contribution which is taxed and and a penalty of 10% on that income .A form 5329 form is generated for the penalty. Correct?

Yes, that is correct.

Thanks. Appreciate your response.

Glad to help!