dmertz
Level 15

Retirement tax questions

Some information seems to be missing from the description of the events.

 

"This distribution contained a small portion of "Pre-tax 401k" contribution., the amount is $260."

 

Was this the entire distribution from the 401(k)?  If so, something doesn't make sense.  An in-service distribution of "contributions" (elective deferrals) you had made to the 401(k) is generally not permitted before age 59½.  Was this instead a distribution of an after-tax sub-account and the $260 was investment gain (not contributions)?  If so, what the after-tax portion rolled over directly to a Roth IRA (so-called mega-backdoor Roth)?  If so, why didn't you just directly roll the entire distribution over to the Roth IRA?

 

I'm guessing that you received a code-G Form 1099-R reporting the distribution from the 401(k) that is also reportable.

 

The $260 is not a regular traditional IRA contribution (unless it was somehow a distribution that was not eligible for rollover).  For the information that follows, I'll assume that no after-tax money was rolled over from the 401(k) to your traditional IRA.  You must enter the $6,000 nondeductible traditional IRA contribution under Deductions & Credits.  TurboTax will then include this on Form 8606 line 1.  On the rest of the form (or, more likely, TurboTax's version of Worksheet 1-1 Form IRS Pub 590-B) TurboTax will calculate the taxable amount using your $6,000 basis in nondeductible traditional IRA contributions.  Also be sure to enter your year-end value in traditional IRAs.  (If the year-end value in traditional IRAs was nonzero, more than $260 will be taxable and some amount of your basis in nondeductible traditional IRA contributions remains in your traditional IRAs to reduce the taxable amount of future traditional IRA distributions.)