@rukaimelca wrote:
It has a Distribution code: 2.
My question is why would turbotax ask a question: "Did this money come from a Roth IRA?"?
Thank you.
There may be 2 codes, a number and a letter.
An IRA is never a 401(k). IRAs and 401(k)s are different plans under different sections of the tax law. Even though they have the same purpose, the rules are very different in some areas.
Your 401(k) might be a "designated Roth 401(k)", meaning that you made contributions after-tax. A distributions from a designated Roth 401(k) should have code B in box 7 along with a number code. If there is no letter code, the account is probably a pre-tax 401(k).
Code 2 indicates an early distribution (before age 59-1/2) but that an exception to the penalty for early withdrawal may apply. Without knowing more or seeing the 1099-R, Turbotax is probably trying to work out if the money is taxable to you and if the 10% penalty for early withdrawal applies.
Do you think you are exempt from the 10% penalty, and why? What are the circumstances of this withdrawal? It's possible the plan trustee used the wrong code.
The simple answer is, if the account is a 401k, then it is not a Roth IRA.
