dmertz
Level 15

Retirement tax questions

Based on the instructions for Form 8606, the answer I gave and the way TurboTax works are correct.  The instructions for Line 22 of Form 8606 say, "Increase the amount on line 22 by any amount rolled in from a designated Roth account that is treated as investment in the contract."  The "investment in the contract" is the contribution basis in the Roth 401(k) plus the basis from In-plan Roth Rollovers that have met the 5-year holding period, or it's the entire amount rolled over to the Roth IRA from a Roth 401(k) if the distribution from the Roth 401(k) would have been a qualified distribution had the distribution not been rolled over.

Also, the instructions for line 24 of Form 8606 say, "Don’t include amounts rolled in from a designated Roth account since these amounts are included on line 22."

(Note that "designated Roth account" is the formal term for Roth 401(k), Roth 403(b) and Roth 457(b) accounts.  Where the instructions refer to "qualified retirement plan," they are typically referring to the *traditional* account in a 401(k), 403(b) or 457(b).  The instruction for line 24 referring to rollovers from a qualified retirement plan was added in 2008 when rollovers directly to a Roth IRA from a traditional account in a qualified retirement plan became permissible, essentially equivalent to a Roth conversion.)