Again, thank you for helping me understand more.
Please allow me to re-phrase.
Example:
The 457(b) amount rolled over to the Roth Contributory accounts =$10,000
Earnings generated within the new Roth Contributory account =$500
The $10,000 amount that was directly rolled into the new Roth Contributory account has satisfied the 5 year holding period and is not taxable (e.g. qualified). The $500 earnings, generated by that amount rolled over will need a separate 5 year period to be free from taxation. These earnings will become qualified in 2027.
I would understand then, that this new Roth Contributory account is a mixture of qualified (amount rolled over) and non-qualified amounts (earnings).
However, I understand, from speaking with the new custodian, my 1099R will be coded ‘T” in box
7 even if I only take a distribution of the qualified amount (the $10,000).
If I only take a distribution of $10,000, I’m confused by why I would answer “No” to the question….‘Have you met the 5 year qualification period’. I understand that the $10,000 was qualified under the old 457(b) plan.
I’m unclear about the statement :
’When entering any code-T distribution into any version of TurboTax prior to 2027 TurboTax you'll need to answer No to the question that TurboTax asks to determine if you met the 5-year qualification period for your Roth IRAs.’
Does this statement above also apply to the $10,000 from the original 457(b) plan? By my understanding it does not apply, the statement above only applies to the $500 earnings.
May I ask for clarification.
Thanks so much for your input!
