dmertz
Level 15

Retirement tax questions

There is nothing illegal about the rollover of after-tax money from a traditional 401(k) to a traditional IRA.  No Roth 401(k) funds are involved.

 

The following assumes that you have no other traditional IRAs and that your total balance in traditional IRAs at the end of 2022 was $10,000. 

 

  1. Enter the code-G Form 1099-R and answer No to each of the questions that ask if you rolled it over to any type of Roth account.
  2. Enter the code-2 Form 1099-R and indicate that you moved the money to another retirement account, that you did a combination of rolling over converting and cashing out, then enter $16,000 as the amount converted to Roth.
  3. Click the Continue button on the page that lists the Forms 1099-R that you have entered.
  4. Continue until TurboTax asks if you made and tracked nondeductible contributions to your traditional IRAs and answer Yes.
  5. Click the EasyGuide button.  Continue, mark the box to indicate that you transferred money from an employer plan and Continue.
  6. Enter $19,000 as the basis rolled over from the 401(k), Continue, then explain that this $19,000 is after-tax basis rolled over form the 401(k).
  7. Enter $10,000 as the 2022 year-end value in your traditional IRAs.
  8. Under Deductions & Credits, enter your $6,000 contribution made for 2022 and indicate that all $6,000 of that contribution was made in 2023.
  9. Continue and answer Yes when again asks if you made an tracked nondeductible traditional IRA contributions.  Just click Continue since you already did the EasyGuide thing.

TurboTax will prepare Form 8606 (using Worksheet 1-1 From IRS Pub 590-B) to calculate the taxable amount of your Roth conversion (line 18 = $615) and the amount of basis in nondeductible traditional IRA contributions that remains in your traditional IRAs (line 14 = $9,615).

 

Again assuming that you have no other traditional IRAs, it makes little sense to me that in 2022 you did not convert everything in your traditional IRAs to Roth, leaving a $0 balance at year-end.

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