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Code J means just what it says - you took an early distribution. Ameritrade doesn't know that you bought a house, they just know that you took out your money, and they're alerting the IRS. The feds, in turn, will want to know what you're up to. But relax - buying a first home makes this a qualified distribution or otherwise excuses taxes and penalties. You'll show the distribution on Form 8606, and perhaps you'll also need Form 5329 to excuse penalties - not sure with a Roth. In any case, have a look at Pub 590 on Individual Retirement Arrangements.


P.S It sounds like you DO have a loss on the account which gets shown as a miscellaneous deduction on Sch A, unfortunately subject to 2% AGI limit. But you still might want to explore that - see FAQ and other sources.
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