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    John11552's Avatar
    John11552 Posts: 5, Reputation: 1
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    #1

    Feb 16, 2009, 01:03 PM
    Unexpected Roth Distribution
    I am 57 years old. Early in 2008 I made my annual $5K contribution to my Roth. Late that year I sold a holding which pushed my income past the limit allowed for Roth contribution. I was forced to remove my $5K contribution plus the earnings. I received a 1099-R from my financial institution which shows a $0 amount for line 2a (Taxable amount) and $0 for line 4 (Federal Income tax withheld). Am I required to pay tax on the entire amount, only the earnings or neither?

    Thanks in advance for your help.

    John
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Feb 16, 2009, 01:15 PM

    You report the amount from Box 2a on line 15 of your 1040. So it looks like all that happened is they returned your contribution, and there were no earnings attributable to your $5K contribution. What distribution code did they put in Box 7?

    See the instructions for form 1040 (page 23) and form 8606:

    http://www.irs.gov/pub/irs-pdf/i1040.pdf
    www.irs.gov/pub/irs-pdf/i8606.pdf
    John11552's Avatar
    John11552 Posts: 5, Reputation: 1
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    #3

    Feb 17, 2009, 06:28 PM
    Quote Originally Posted by ebaines View Post
    You report the amount from Box 2a on line 15 of your 1040. So it looks like all that happened is they returned your contribution, and there were no earnings attributable to your $5K contribution. What distribution code did they put in Box 7?

    See the instructions for form 1040 (page 23) and form 8606:

    http://www.irs.gov/pub/irs-pdf/i1040.pdf
    www.irs.gov/pub/irs-pdf/i8606.pdf
    The code in Box 7 is J8.

    There was an earnings of $317.61 in addition to the $5K.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #4

    Feb 17, 2009, 06:40 PM

    Where did they report the earnings of $317.61?

    Code J means "Early Distribution from a Roth IRA" and 8 means "excess contributions plus earnings/excess deferrals taxable in 2009." So it seems that the earnings are not taxable to you in '08. Again, it seems to me that you don't need to report a thing this year, but when you do your '09 tax filing in early 2010 you may have an issue with that $317.61.
    John11552's Avatar
    John11552 Posts: 5, Reputation: 1
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    #5

    Feb 22, 2009, 05:23 PM
    The earnings are reported along with the principal on line 1 (Gross distribution) as $5317.61
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