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I contributed $425 to my Roth IRA before I figured out I wasn't eligible this year (due to AGI). Once I realized it, I called my brokerage to request the excess contributions be removed from my Roth and transferred to my non-retirement brokerage account. The amount was $316, due to the shares I purchased in the Roth declining in value.

Now, I've received a 1099-R for the $316. It lists distribution code 8J. My tax software (Tax Act pro version) is now showing that I need to complete Form 5329 and that I owe taxes on the $316. This doesn't jive to me since I had a LOSS, not gain on the excess contributions. Can anyone help? TIA.

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