Are Roth Excess Deferrals Taxed Twice?

Q: I read your Ask the Experts column on Roth excess deferrals, and was a bit confused. I had a 2023 Roth excess deferral that was distributed in early 2024. The column indicates that the deferrals “are taxable solely in the calendar year contributed” which, to me, means that my Roth excess deferral would be taxable as income to me on my 2023 tax return. But my excess Roth deferral was already taxed, as Roth contributions are after-tax, not pretax. Would I be taxed twice on my Roth excess deferral in 2023?

Kimberly Boberg, Kelly Geloneck,  Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: You would not be taxed twice if the excess Roth contributions, and earnings thereon, are distributed by April 15 of the year following the year in which the excess Roth contributions were made. Here, if the amounts are distributed by April 15, 2024, you will receive two 2024 Forms 1099-R: one reporting the amount of your excess Roth contributions as nontaxable in 2023 (as you already paid taxes on these amounts); and one reporting the earnings on such excess as a taxable distribution in 2024.

Forms 1099-R for 2024 distributions are due in 2025. Therefore, you should receive these Forms 1099-R in early 2025 to reflect the distribution of the excess and earnings. However, it is important to note that these 2024 Forms 1099-R are for information purposes only and do not need to be attached to your tax return.

NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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