Questions About 1099-R Code J for Roth IRA Withdrawal During Unemployment

I had to withdraw money from my Roth IRA last year when I lost my job in 2024. The thing is, my grandparents were the ones who actually set up the account and made all the contributions to it. I've been reporting capital gains in my tax returns for the past few years, and the amount I took out is definitely more than just those gains. I'm really confused about figuring out how much of my distribution might be taxable. The 1099-R has Code J on it, but I don't have solid records about the original contributions since I didn't personally make any deposits into the account. My grandparents handled all that, and I'm not sure how to determine what portion is taxable without knowing the contribution history. Has anyone dealt with this situation before? How do I figure out the taxable portion when I don't have records of the original contributions?

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18 comments

Grace Thomas

•8M

The good news is that with a Roth IRA, you can always withdraw your contributions tax-free and penalty-free. The Code J on your 1099-R indicates that this is a distribution that's potentially partially taxable - this happens when you withdraw more than just the contributions. Since your grandparents made the contributions, you should try to contact them for records if possible. If that's not an option, you can request a complete distribution history from the financial institution that holds the Roth IRA. They should be able to distinguish between contributions and earnings. The general rule is that with Roth IRAs, withdrawals come out in this order: contributions first (always tax-free), then conversions (if any), and lastly earnings. Only the earnings portion would potentially be taxable and subject to the 10% early withdrawal penalty if you're under 59½, unless you qualify for an exception.

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Grace Thomas

•8M

Roth IRAs are tax-free upon withdrawal only if certain conditions are met. Contributions can always be withdrawn tax-free and penalty-free, but earnings generally need to satisfy the 5-year rule and you need to be 59½ or meet another exception to avoid taxes and penalties on those earnings. Regarding contributions from others - technically, anyone can give you money that you then contribute to your own Roth IRA, but the contribution must be made by the account owner. Most likely, the grandparents gave the money to OP who then made the contributions, or they were acting as authorized agents. The IRS cares that the person whose name is on the account had earned income for the year of contribution and didn't exceed income limits.

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Dylan Baskin

•8M

After struggling with a similar situation, I discovered taxr.ai (https://taxr.ai) which was incredibly helpful. I uploaded my 1099-R with Code J and some old account statements, and their AI analyzed everything to determine my tax basis and potential tax liability. It even helped reconstruct my contribution history when I didn't have complete records. Their document analyzer identified that since it was a Roth IRA, my contributions could be withdrawn tax-free even though the earnings might be taxable. It saved me hours of research and calculations!

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Dylan Baskin

•8M

It was surprisingly accurate. I actually did have my tax professional review it afterward, and they confirmed the calculations were correct. The tool provides detailed explanations about which parts of tax code apply to your situation, so it's not just giving you numbers without context. Yes, it definitely works with other retirement accounts! It handles 401k rollovers, traditional IRAs, Roth conversions, and pretty much any retirement-related tax document. It specifically asks about your rollover situation and walks you through the process to ensure you don't miss anything important.

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Ellie Lopez

•8M

I was really hesitant about using taxr.ai that someone mentioned earlier, but I decided to give it a try with my complicated 401k-to-Roth conversion mess. I'm blown away by how helpful it was! The system actually detected an error in how my distribution was coded that would have cost me an extra $2,300 in taxes. It analyzed my entire contribution history and clearly showed which portions were taxable and which weren't. The report it generated gave me everything I needed to accurately file my taxes, including the exact forms and line numbers where each amount should go. Totally worth trying if you're struggling with retirement account distributions like I was!

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Chad Winthrope

•8M

If you need to speak with the IRS directly about your 1099-R Code J situation, I highly recommend Claimyr (https://claimyr.com). I spent DAYS trying to get through to an IRS agent about a similar retirement distribution issue before discovering them. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They got me connected to a real IRS agent in under 45 minutes when I had been trying unsuccessfully for over a week. The agent was able to access my account history and help me understand exactly how to report my distribution correctly. Saved me so much frustration!

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Chad Winthrope

•8M

It uses a technology that continuously dials and navigates the IRS phone tree until it gets a spot in line, then it calls you and connects you directly when an agent is available. It's basically automating the painful part of calling the IRS so you don't have to sit on hold for hours. I was skeptical too, but it actually works. It's not "cutting the line" or anything unethical - it's just handling the waiting and navigation for you. After trying to get through for days on my own with no success, I was connected within an hour with Claimyr. The IRS doesn't care how you got connected once you're talking to an agent.

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Kylo Ren

•8M

Well I'll be damned. I owe an apology to whoever recommended Claimyr. After my skeptical comment, I decided to try it myself since I've been needing to talk to the IRS about my own retirement account issue for weeks. I was 100% convinced it was going to be a scam, but I actually got connected to an IRS agent in about 35 minutes! The agent was able to pull up my account and confirm exactly which portions of my Roth distribution were taxable based on my contribution history. Saved me hours of frustration and probably prevented me from making a costly mistake on my return. Sometimes I hate being wrong, but in this case I'm actually relieved. Sorry for being such a skeptic!

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Nina Fitzgerald

•8M

Have you checked with the financial institution that holds the Roth IRA? They should have records of all contributions made to the account, regardless of who made them. I had a similar situation and Fidelity was able to provide a complete history going back to when the account was opened. If your grandparents made qualified contributions on your behalf, those amounts would still come out tax-free before any earnings. The key is to document those contribution amounts.

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Nina Fitzgerald

•8M

That's actually pretty common for financial institutions to only maintain detailed records for 7-10 years. Definitely check with your grandparents for the older statements. Another approach is to work backward using your tax returns. If you've been reporting and paying taxes on the earnings each year, you might be able to reconstruct the basis by totaling all the reported earnings and subtracting that from the account value before your withdrawal. The difference would likely represent the contributions.

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