How to report 1099-R code 8J on tax return?

2017-03-01T09:27:23Z

I contributed too much to my Roth IRA in 2016. In December of 2016 my excess contribution was returned to me, plus interest.

The 1099-R correctly shows only the interest as taxable. Then it has code 8J.

Why does the e-file software absolutely insist on filling out form 5329 and charging me an additional 10% penalty? This should NOT be subject to the 10% early withdrawal penalty because it is a Roth account and was returned within the same year.

2017-03-01T09:27:30Z

I contributed too much to my Roth IRA in 2016. In December of 2016 my excess contribution was returned to me, plus interest.

The 1099-R correctly shows only the interest as taxable. Then it has code 8J.

Why does the e-file software absolutely insist on filling out form 5329 and charging me an additional 10% penalty? This should NOT be subject to the 10% early withdrawal penalty because it is a Roth account and was returned within the same year.

2017-03-01T09:27:49Z

Is 8J the wrong code? Am I wrong about how Roths work? Or is the free software just crap?

Eva2017-03-01T17:21:51Z

Favorite Answer

You do pay a penalty for excess contributions. It should only be showing a penalty based on the interest amount. The J code is probably what's throwing it off. Did you fill in the correct section on Form 5329? Some things carry automatically to that form, some things don't.

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Anonymous2017-03-01T19:11:33Z

Tough. The penalty is only on the earnings and is consistent with all withdrawals of anything other than contributions before you are 59.5 years of age.

8J *is* the correct code.

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MDavis2017-03-01T18:17:01Z

You seem to have an understanding of how this situation should work on the forms, so this is a software issue.
If you cannot get the software to do what it is supposed to do then you may need to contact the software provider for an answer.
If that does not work your options are to use other software that works for this situation or to paper file, which takes longer for the IRS to process.
A very clunky option would be to go ahead and file and then file an amendment, but that would be less than ideal.

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