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@DebiHCPA wrote:

Client decides without asking me that he wants to contribute to a ROTH IRA. I see the 5498. I input the $6000 into the program and there is a penalty - can't do a ROTH - income too high. Taxpayer calls Fidelity and asks them to return the money, it was an excessive contribution. They return the money with a letter that says we are returning the $6000 plus $166 of earnings which will be taxable on the 2022 return. We will send you a 1099R next year but you will need to correct 2022. 2022 is not finished so now I want to pretend that I have that 1099R and fix it now in the program. So I am just trying to fix it now. I think I have it fixed with various suggestions. Thanks.

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This is what I originally assumed was the fact pattern but then you introduced this information:

"It will be a code R per the retirement dept of Fidelity."

That suggests that someone at Fidelity thinks this was a recharacterization.  Since they're the ones pushing the buttons, IMO they are a more reliable source of information than "what the client thinks happened."  Maybe your clients are smarter than mine but I still have one client who swears the only thing he has at Primerica is an IRA.  Yet every year he gets a 1099-DIV (in addition to a 5498, so yes, one of the things he has there is an IRA).  Probably because the promoter CONvinced him to open multiple accounts, one was an IRA and another was a taxable account.

So we circle back to what happened to the money?  I think we all agree that it came OUT of the Roth IRA account.  Did it go to the client to deposit into their checking account (corrective distribution)?  Did it get transferred to a taxable brokerage account at Fidelity (corrective distribution)?  Did it get transferred into a Traditional IRA at Fidelity (recharacterization)?  Or any number of other possibilities.

It's entirely possible that contacting Fidelity again will yield a completely different answer about what code(s) will appear on the 1099-R.  I've had terrible experiences with the "front line" phone people at Vanguard.  Some of them are barely qualified to answer a phone, let alone discuss retirement options.  So the professional skeptic in me says "stop the presses" so we can go get facts that actually align with each other.