dmertz
Level 15

Retirement tax questions

Yes, your SEP-IRA is a type of traditional IRA that must have its year-end value included in the total value of all traditional IRAs.

 

Adding the SEP-IRA year end value allows TurboTax to correct the taxable amount of your Roth conversion, previously calculated incorrectly on Form 8606 due to the missing required SEP-IRA value.

 

Because you have a SEP-IRA, your Roth conversion was not made entirely from after-tax money.  Only a proportionate amount of your basis in nondeductible traditional contributions is included in your Roth conversion, with the rest of your basis in nondeductible traditional IRA contributions remaining in your traditional IRAs in aggregate to be applied to future distributions, reducing the taxable amount of those future distributions, until you have no more money in any traditional IRAs, including the SEP-IRA.

 

Not reporting your SEP-IRA value would mean filing an incorrect tax return and an underpayment of your true tax liability for 2019.