Would you kindly help me to resolve the issue of getting 6% penalty of access contribution?
Here is the situation:
- Made $5,500 contribution to Traditional IRA in 2018
- Made delayed conversion (including $300 of gains) from Traditional to Roth IRA (Backdoor) on March. 2019
- Could not received nor included 1099-R of 2018 due to the late conversion
- Made $6,000 contribution and conversion to Roth in 2019
- Received about gross distribution of about $11,800 in 1099-R in 2019
- Putting $11,800 as nondeductible contributions to Traditional IRA and Roth IRA resulted TT that I should pay 6% penalty
The action that I made is:
- Made two separate entries to 1099-R within 'Wages & Incomes'
- One of the entry is $5,800 gross income of 1099-R, 2018 by selecting 'Box 7: P-Return of contribution taxable in 2018' although I did not received 1099-R in 2018
- Another entry is $6,000 gross income of 1099-R, 2019 by selecting 'Box 7: 2-Early distribution (except Roth)'
- In 'deductions & credits', I made $11,800 of nondeductible contributions to 'Traditional IRA and Roth IRA'
- Now TT tells me that I need to pay 6% penalty on $300 (the interest that I accidentally gained in Traditional IRA before converting to Roth)
What should I do now? Is this even a correct way to do it? I'm trying to properly report everything and don't know what else I can do. Please help!!
