TurboTax’s regular Solo 401(k) interview is designed for deductible contributions. Because Roth employer contributions are taxable and not deductible, they aren’t included in the usual retirement deduction sections. Here is how to enter as taxable income.
Enter as a "Substitute" 1099-R (The IRS Recommended Method)
The IRS requires these contributions to be reported on Form 1099-R with Code G (in Box 7) for the year they are allocated to your account. Your custodian should eventually issue you a 1099-R for this. If they haven't yet, or you are filing before it arrives, you can enter a "Substitute" 1099-R in the Retirement Plans and Social Security section in your personal return..
- Box 1 (Gross Distribution): Enter the Profit Sharing amount.
- Box 2a (Taxable Amount): Enter the same amount (since you are paying tax on it now).
- Box 7 (Distribution Code): Enter Code G.
After this is entered, there is a follow-up section where you will check that this is a substitute 1099R.
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