When you convert a traditional IRA to a Roth IRA, it is likely not considered a "qualified distribution." Instead, it is a taxable event where the converted amount is added to your income for the year. Here's what you need to know:
- Type of Distribution: In TurboTax, you should select "IRA with a non-qualified distribution" for your Roth conversion - unless you meet the criteria under *Is it Qualified below.
- The amount converted from your Traditional IRA to your Roth IRA will normally be included in your taxable income for 2024.
- IRS Rules: The IRS specifies that conversions are taxable events because they involve moving funds from a tax-deferred account to a tax-free account
*Is it Qualified:
- A qualified distribution is one that is made :
- at least five years after the year of the participant's first designated Roth contribution (counting the first year as part of the five) and is made:
- On or after attainment of age 59½, On account of the participant's disability, or.
- On or after the participant's death.
Entering in TurboTax:
- Open Your Return: Log in to TurboTax and open your tax return.
- Search for 1099-R: Use the search box (magnifying glass icon) at the top right, type "1099-R," and click on the "Jump to 1099-R" link.
- Enter 1099-R Information: Enter the details from your 1099-R form. Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
- Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
- Continue through the questions.
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