My spouse has/had two traditional IRAs for a number of years. We are in the process of converting to Roth over 2 years, 2021 and 2022. Prior to starting conversion in 2021, the values were as follows (numbers rounded for simplicity):
- IRA #1: $100,000 value with a $60,000 basis ($60,000 of earlier years after-tax non-deductible contributions, and $40,000 of gains).
- IRA #2: Rollover IRA, $150,000 value, rolled over from a previous employer pension plan (full $150,000 is pre-tax).
We're converting these accounts to Roth over a period of 2 years, in 2021 and 2022. In 2021, we converted the entire balance of IRA #1 and $25k from IRA #2. At 2021 year-end, the values were as follows:
- IRA #1: 0.00
- IRA #2: $125,000
- Roth IRA: $125,000 (new account in 2021)
- I understand the pro-rata rule requires me to spread the $60k basis across the two year conversion.
How do I handle this in turbotax?
- I entered the two 1099-Rs I received for the withdrawls going into the Roth account.
- I've also seen that Turbotax is aware of the $60k basis from previous years returns.
- I can't figure out how I spread that basis to our 2022 return next year, after we convert the remaining balance of IRA #2.
- I've only used "step-by-step" for data entry, but looking at form 8606-S in Turbotax, line 7 says "do not include rollovers." I'm not sure why it matters that one of the IRAs is a rollover.
- I'm thoroughly confused how to make sure this is correctly entered/handled in Turbotax.
I have searched the community and read the various relevant posts. I believe I understand the pro-rata rule, but I just don't get how to deal with this in Turbotax. Thanks for any help/insight you can provide.
