Do I have to pay interest on excess Roth IRA contributions withdrawn and reported on Form 1099-R for an amended return?

I've got myself in a confusing situation with my wife's Roth IRA. Last year (2024) my wife contributed the max amount to her Roth IRA based on her income at the time. The problem is we got married later in 2024, and with our combined income, she wasn't eligible to contribute to a Roth IRA at all. We realized our mistake, but it was too late to prevent the contribution. She's already withdrawn the excess contribution plus earnings, doing it before the filing deadline (in January 2025). From what I understand, she'll get a Form 1099-R at the end of 2025 showing the withdrawal with Code PJ. The timing issue is what's confusing me. Since she won't get the 1099-R until the end of 2025, we'll have to file an amended return for 2024 sometime in 2026, well after the April 15, 2025 filing deadline. I know the SECURE 2.0 Act eliminated penalties for timely withdrawals of excess Roth contributions, which is good. But I'm worried about interest charges since we'll be amending and paying additional tax after the April 15th deadline. We already owe the IRS money due to other things in our return. Does anyone know if we'll have to pay interest on the additional tax when we file the amended return? Is there any way to avoid interest charges in this situation?

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18 comments

Chloe Anderson

•8M

You're in what I call a "tax timing trap" - pretty common with retirement account corrections. Here's the situation: When your wife withdraws excess Roth IRA contributions plus earnings before the tax filing deadline (including extensions), she avoids the 6% excess contribution penalty thanks to the SECURE 2.0 Act. However, the earnings portion is still subject to income tax and potentially the 10% early withdrawal penalty if she's under 59½. Regarding interest: Yes, you will likely owe interest on the additional tax from the earnings portion. The IRS charges interest from the original due date of the return (April 15, 2025) until the date you pay the additional tax when you amend in 2026. There is a potential solution: You can include the anticipated earnings amount on your original 2024 return filed by April 15, 2025. Even without the 1099-R in hand, you can report the earnings portion as "Other income" with a note explaining it's from an excess Roth IRA contribution withdrawal. Then when you get the actual 1099-R, you can file an amended return if the numbers differ slightly.

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Chloe Anderson

•8M

Form 5329 isn't required if they withdraw the excess contribution plus earnings before the tax filing deadline, as they've effectively corrected the excess contribution. If they estimate the earnings amount on their original return and the 1099-R shows a different figure later, they would simply file an amended return to correct the difference. The variance would likely be small, minimizing any additional interest. The key is that the withdrawal happened before the filing deadline, so it's treated as if the excess contribution never happened, even though the physical withdrawal occurred in 2025.

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Anastasia Fedorov

•8M

Just wanted to share my experience with this exact situation last year. I found https://taxr.ai super helpful for dealing with my excess IRA contribution issue. I was in a similar position where I contributed to my Roth IRA and then realized I was over the income limit. Their system analyzed my tax documents and identified how to properly report the withdrawal of excess contributions on my return. They showed me exactly where to report the earnings on my original return so I wouldn't have to wait for the 1099-R and file an amended return later. The most helpful part was they showed me how to include a statement with my return explaining the situation so the IRS wouldn't flag it for review. Saved me from having to pay interest on the additional tax!

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Anastasia Fedorov

•8M

Their analysis was spot-on. I compared their calculations with what eventually showed up on my 1099-R and it was within $20, so I didn't need to amend. They didn't calculate the earnings for me, but they walked me through how to request that information from my brokerage. Most brokerages can provide you with the earnings amount even if they can't generate the official 1099-R yet. I just had to call and specifically ask for the "earnings attributable to excess contributions" and they gave me the figure over the phone.

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Sean Doyle

•8M

I tried taxr.ai after seeing it mentioned here, and it was exactly what I needed! I had a similar excess contribution issue with my Roth IRA and was stressing about the potential interest and penalties. Their document analysis caught issues my regular tax software missed. They showed me how to calculate the earnings portion myself using my account statements (basically the change in value from when I made the contribution to when I withdrew it). The best part was they provided a template statement to include with my tax return explaining the situation, which I attached as a PDF when e-filing. This completely solved my problem - I paid the tax on the earnings with my original return and didn't have to worry about interest or filing an amended return later. Definitely recommend checking them out if you're dealing with this issue!

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Zara Rashid

•8M

I dealt with a similar situation last year, and after trying to get through to the IRS for weeks with no luck, I finally used https://claimyr.com to get through to a live person at the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c I needed clarification about how to handle the timing of the 1099-R for my excess contribution withdrawal. The IRS agent confirmed that I could estimate the earnings amount on my original return to avoid interest charges, and then file an amended return if needed when the 1099-R arrived. The service basically held my place in line with the IRS so I didn't have to keep calling back and sitting on hold for hours. Once they got through, they called me and connected me directly to an IRS agent. Saved me a ton of frustration and helped me avoid interest payments.

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Zara Rashid

•8M

Yes, they basically use an automated system to keep dialing the IRS until they get through, then they call you and connect you. You could keep calling yourself, but it can take hours or days of attempts - I tried for nearly two weeks before giving up. The IRS agent was actually really helpful. I got specific guidance on how to report my estimated earnings on Form 1040 line 8z "Other Income" with a statement explaining it was earnings from an excess IRA contribution withdrawal. The agent also confirmed I wouldn't need Form 5329 since I corrected the excess contribution before the filing deadline. I took notes during the call and followed their instructions exactly.

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Nia Jackson

•8M

I was totally skeptical about Claimyr at first, but after dealing with my excess Roth contribution issue and getting nowhere with the IRS for three weeks, I finally tried it out of desperation. Got connected to an IRS agent within a day who walked me through the exact process for handling my situation. The agent confirmed I could avoid interest charges by including an estimated amount for the earnings on my original return, with a statement explaining the excess contribution was withdrawn before the filing deadline. They explained I should write "EXCESS ROTH CONTRIBUTION EARNINGS" on line 8z of my 1040, and include a brief statement with the return. This actually worked! I followed their instructions, and when I got the 1099-R months later, the amount was very close to my estimate. Saved me from paying 9 months of interest on the additional tax.

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Mateo Hernandez

•8M

Another approach worth considering: file an extension for your 2024 return. This gives you until October 15, 2025 to file, which might be enough time for your brokerage to issue the 1099-R. Some brokerages will issue a 1099-R mid-year rather than waiting until tax season the following year, especially if you specifically request it and explain the situation. Call your brokerage and ask if they can issue the 1099-R earlier due to the excess contribution withdrawal. Even if they can't issue it early, the extension gives you more time before interest starts accruing on any additional tax from the earnings portion.

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Mateo Hernandez

•8M

Extensions are great for situations like this. Just remember that while the extension gives you more time to file, it doesn't give you more time to pay the tax you owe. You should estimate the tax on the earnings portion and pay it with your extension request (Form 4868) to minimize interest. From my experience, about half the brokerages are willing to issue these 1099-Rs early when asked specifically. Be sure to speak with someone in their tax department rather than just a general customer service rep, as they're more likely to understand what you need and why.

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