ReneV4
Expert Alumni

Retirement tax questions

There is no way to enter this to avoid tax liability. Here's why. The IRS looks at the value of your Traditional IRA at the end of the year (December 31). Because you rolled your 401(k) into your Traditional IRA within the same calendar year as your conversion, the IRS put all of your Traditional IRAs into the same bucket.

 

Because of this, you now have a large pre-tax balance in your Traditional IRA on December 31.

 

The only way to have avoided this was to have a zero balance in all Traditional IRAs on December 31.

 

If you had rolled that Traditional IRA money back into a current employer's 401(k), it would not have been counted in the calculation.

 

Now, you should ensure that you enter your after-tax 401(k) funds as the basis to slightly lower your taxable percentage.

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