Hi,
In 2021 I had excess contribution into my Vanguard ROTH Ira. That year I ended up with a bit larger income, and the excess contribution of $1450.
I did not know this until March of 2023, when I myself recalculated, found the excess, called V, V sent me a check for $1450. A month later, in April, I said all this to my tax person when I did my income taxes. She put an excess into my taxes, but I did not pay taxes, she said wait for the form - if I remember correctly.
In 2024 I did not expect anything from Vanguard and so I did not check the forms. A few weeks ago I found that back in January Vanguard sent Form 1099-R.
The way V put it in this form:
1. Gross distribution: $1450
2a. Taxable amount [empty]
2b. Taxable amount not determined (X)
7. Distribution Code - J
16. State distribution $1450
Everything else is blank
I checked code J: Early distribution from a Roth IRA, no known exception (in most cases, under age 59½).
I called Vanguard, talked to a tax specialist. I owe 6% penalty ($87) each year that excess money remains in ira. He explained that because I missed a year (2022), I had to pay 6% tax on $1450 in 2021 and 2022.
I sent the form to my tax person. She said the form as is indicates the early distribution and I have to pay tax on $1450, around 20%, plus 10% because I got this withdrawal before I'm 59.5.
Who is wrong here? Did V messed the Form 1099-R with this J code? Or it is the tax person who doesn't know what to do with it?
What should I do?![:confused]( "confused")
Thanks!
In 2021 I had excess contribution into my Vanguard ROTH Ira. That year I ended up with a bit larger income, and the excess contribution of $1450.
I did not know this until March of 2023, when I myself recalculated, found the excess, called V, V sent me a check for $1450. A month later, in April, I said all this to my tax person when I did my income taxes. She put an excess into my taxes, but I did not pay taxes, she said wait for the form - if I remember correctly.
In 2024 I did not expect anything from Vanguard and so I did not check the forms. A few weeks ago I found that back in January Vanguard sent Form 1099-R.
The way V put it in this form:
1. Gross distribution: $1450
2a. Taxable amount [empty]
2b. Taxable amount not determined (X)
7. Distribution Code - J
16. State distribution $1450
Everything else is blank
I checked code J: Early distribution from a Roth IRA, no known exception (in most cases, under age 59½).
I called Vanguard, talked to a tax specialist. I owe 6% penalty ($87) each year that excess money remains in ira. He explained that because I missed a year (2022), I had to pay 6% tax on $1450 in 2021 and 2022.
I sent the form to my tax person. She said the form as is indicates the early distribution and I have to pay tax on $1450, around 20%, plus 10% because I got this withdrawal before I'm 59.5.
Who is wrong here? Did V messed the Form 1099-R with this J code? Or it is the tax person who doesn't know what to do with it?
What should I do?
Thanks!
Statistics: Posted by Lana2016 — Wed Jul 31, 2024 10:03 pm — Replies 1 — Views 195