Roth IRA excess removal

Submitted by Sten Lindquist on Sat, 2020-04-18 00:43

If a client removes a Roth IRA excess by the deadline and has met five years and is over 59.5, is the excess removal of the earnings tax free? The 1099R instructions for code Q say to use code J instead of Q if code 8 or P is also being used.

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Permalink Submitted by David Mertz on Sat, 2020-04-18 02:12

The earnings are subject to income tax but are not subject to an early-distribution penalty. Form 5329 should be filed claiming an Other exception (code 12) on line 2 of Form 5329 on the taxable earnings, eliminating the penalty suggested by the code J.