Understanding Roth 401k 1099-R Distribution Codes 8B and BP - Do I need to amend my return?

You're dealing with an excess deferral correction, which can be tricky! Let me help clarify what's happening with your two 1099-R forms. The BP distribution code represents the return of your excess Roth 401k contributions. The $0 taxable amount is correct because you already paid tax on those Roth contributions when you made them. TurboTax shouldn't be including this as taxable income for 2021, and you need to override that calculation. The 8B distribution code represents the earnings on those excess contributions, which are indeed taxable in the year of distribution (2021). That's why this form shows the full amount as taxable. You're correct that you don't need to amend your 2020 return. Since these were Roth contributions, you already paid tax on that money in 2020. The correction is simply returning those contributions to you (tax-free) along with the earnings (taxable). For your TurboTax issue, you'll need to manually override the software's calculation for the BP-coded 1099-R. There should be an option to "override" or "adjust" the taxable amount when entering the form details.

Based on what you've described, you're handling this correctly and TurboTax is getting it wrong! The BP distribution code specifically indicates a return of excess Roth 401(k) contributions. Since Roth contributions are made with after-tax dollars, you've already paid tax on this money when it went into the plan in 2020. The $0 taxable amount in Box 2a confirms this treatment. The 8B code represents the earnings on those excess contributions, which are correctly shown as fully taxable in the year of distribution (2021). You do NOT need to amend your 2020 return. The correction happens entirely in 2021. With traditional pre-tax 401(k) corrections, you sometimes need to amend the prior year, but not with Roth corrections. For TurboTax, you'll need to manually override the software. After entering the 1099-R with code BP, look for an "adjust" or "override" option somewhere in the review screen for that form. Make sure the taxable amount stays at $0 as reported on your actual 1099-R.

I had almost this exact situation last year with my Roth 401k and spent hours researching the right way to handle it. I found a tool called taxr.ai (https://taxr.ai) that really helped me understand my 1099-R codes and what they meant for my tax situation. I uploaded my confusing 1099-Rs to taxr.ai and it immediately clarified that the BP code meant my excess Roth contribution was returning tax-free (since I'd already paid tax on it), while the 8B was for the earnings that were indeed taxable. It saved me from incorrectly amending my prior year return AND from paying taxes twice on my Roth contributions. The tool also explained exactly how to override TurboTax's default handling of these forms, which fixed my issue. Might be worth checking out if you're still confused about how to handle this in your tax software.

I was initially skeptical about using taxr.ai when someone recommended it here, but it ended up being incredibly helpful with my Roth 401k distribution codes. I had the exact same issue with distribution codes BP and 8B from a plan correction. The step-by-step guidance showed me exactly where in TurboTax I needed to override the default calculations. The software was trying to tax me twice on my Roth contributions! I definitely would have either overpaid or spent hundreds on a tax professional to figure this out. Plus it gave me the specific IRS regulations to cite if my return got questioned. Turns out this excess contribution situation is pretty common but most tax software handles it incorrectly by default.

After helping dozens of clients with similar Roth 401k excess contribution corrections, I can tell you the IRS phone support is absolutely hopeless on this issue. I spent 3+ hours on hold last tax season trying to get clarification for a client. If you need to speak with the IRS about this (which you might if TurboTax keeps giving you problems), I highly recommend using Claimyr (https://claimyr.com). They've completely changed how I deal with the IRS. Their system holds your place in the IRS phone queue and calls you back when an agent is available. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c This saves hours of hold time, especially for complex issues like distribution codes that most frontline IRS staff aren't well-versed in. You'll want to request someone who specializes in retirement distributions when you get connected.

I was super skeptical about Claimyr when I first read about it here. The hold times with the IRS are legendary, so the idea that some service could bypass that seemed far-fetched. But I had this exact Roth 401k excess contribution issue that TurboTax was handling incorrectly, and I needed guidance directly from the IRS. So I gave Claimyr a shot instead of wasting my entire afternoon on hold. IT ACTUALLY WORKED! The system called me back when an agent was available (took about 90 minutes, but I was working on other things). I spoke with someone in the retirement distributions department who confirmed everything - no need to amend my 2020 return, and the BP-coded distribution shouldn't be taxable in 2021. This saved me from potentially paying hundreds in taxes I didn't owe, and I didn't have to waste hours on hold. I'm converted!

I had a similar situation with my husband's 401k last year. For the BP code, I needed to manually tell TurboTax that the taxable amount was $0. Here's what I did: In TurboTax, after entering the 1099-R information, there should be an option to "Review" the entry. Within that review screen, there's a way to override the taxable amount. I had to dig around a bit, but it was something like "Edit" or "Override" next to the taxable amount field. For your second 1099-R with the 8B code, the earnings should indeed be taxable in 2021, so TurboTax is handling that correctly at least.

The people saying you don't need to amend your 2020 return are correct. For Roth 401k excess contributions, the correction is handled in the distribution year (2021). For anyone else dealing with this: distribution codes are crucial for understanding tax treatment: - BP = Roth contribution being returned (not taxable) - 8B = Earnings on those excess contributions (taxable) If your tax software doesn't handle this correctly, switch software! I've found FreeTaxUSA handles these retirement distribution codes much better than TurboTax for complex situations.