1099-R 401K after tax contributions rollover to Roth IRA and IRA account

[GeorgeM777]

It appears as if you want to move money from your after-tax traditional IRA to a Roth IRA.  If that is the case, the movement of after-tax funds is called a "conversion."  

As a way of background, any amount in a non-Roth IRA that is converted to a Roth IRA is treated as a distribution from the non-Roth IRA and is therefore taxable.  To add to a previous response, if the non-Roth IRA has a basis because contributions (other than rollover contributions) have been made that were nondeductible, then that part of the distribution is treated as a return of basis and is not taxable.  It appears as if you feel that your 1099-R is incorrect because upon entering the information into TurboTax, you get a result reflecting that the funds you are converting are taxable when you believe the opposite should be the case.  Follow the below steps to convert your traditional IRA to a Roth IRA. 

Step 1:  Enter the Non-Deductible Contribution to a Traditional IRA

1. Open your return if it’s not already open
2. Inside TurboTax, search for ira contributions and select the Jump to link in the search results
3. Select Traditional IRA on the Traditional IRA and Roth IRA screen and Continue
4. Answer No to Is This a Repayment of a Retirement Distribution?
5. On the Tell Us How Much You Contributed screen, enter the amount contributed and continue
6. Answer No on the Did You Change Your Mind? screen
7. Answer the questions on the following screens, until you reach Choose Not to Deduct IRA Contributions. Select Yes, make part of my IRA contribution nondeductible and Continue

Step 2:  Enter the Conversion from a Traditional IRA to a Roth IRA

1. Inside TurboTax, search for 1099-r and select the Jump to link in the search results
2. Answer Yes to Did you get a 1099-R in 2021?, then Continue
   • If you land on the Your 1099-R Entries screen, select Add Another 1099-R
3. Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions
4. Answer None of these apply when you reach the screen Do any of these situations apply to you?
5. Select I converted some or all of it to a Roth IRA on the Tell us if you moved the money through a rollover or conversion screen
6. Next, choose Yes, all of this money was converted to a Roth IRA
7. Continue answering questions until you come to the Your 1099-R Entries screen

To check the results of your traditional IRA to Roth IRA conversion, see your Form 1040:

1. On the left side of your screen, select Tax Tools, then Tools
2. Under Tool Center, select View Tax Summary
3. On the left side of your screen, select Preview my 1040
   • Your Roth IRA amount should be listed on Form 1040, Line 4a  as IRA distributions
   • Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time your converted it to Roth IRA, then the earnings would be taxable
   • Schedule 1, Line 20 IRA deduction, should be blank
4. Select Back on the left side of your screen to return to where you left off in TurboTax

[nc cpl]

George - first, much thanks for the step by step guide!! However, when I work my way through the additional screens (incl questions for my wife) (Step 1, #7) it says we do not qualify for any contributions to be nondeductible (i have an employer retirement plan and total income too high), so.... itdoes not present a screen with the option "Choose Not to Deduct IRA Contributions. Select Yes, make part of my IRA contribution nondeductible and Continue." It just closes out the IRA section entirely. Am I at a dead end at this point?

If I skip to checking my results, Line 4a shows has the total of the two 1099-r's specific to this move (amount sent to my 401k and another for amount converted into the Roth I have). Line 4b indicates  "Rollover" and shows zero as the taxable amount. On Schedule 1, Line 20, IRA Deduction, it is blank as you indicate it should be.

Anything else I need to do or correct?

[Critter-3]

" #7, it says we do not qualify to make any of our contributions nondeductible " 

Are you allowed to make IRA contributions at all ?   Do you have earned income ?   If you cannot make the contributions then of course none of them can be non deductible.

If you have not yet completed the INCOME section then please do so now and return to the IRA section later.

[nc cpl]

Critter - yes, we can still make nondeductible contributions as in most previous years, but thats not my question.

My question is related to a "rollout" of funds from my TIRA, divided between my employers 401K which allows "roll ins" from a TIRA, with the remaining after-tax contributions rolled into a Roth IRA (thus separating the pre from the post tax contributions in the TIRA, making it easier to account for down the road and no longer having to keep track of a "comingled" TIRA). Its a move not done by many, but perfectly acceptable if you have a comingled funds in an TIRA and want to separate them (and an employer plan that accepts the pretax rollout).

However, the confusing aspect of doing this (this will likely be my only time doing it) is that the 1099-R shows the after tax amount sent to the Roth as taxable, even though it isn't (Vanguard confirms this is how its reported since all move such as this are treated as taxable. So you have to make sure you report it correctly so you aren't double taxed on it.

[Critter-3]

Ok ... roll overs are reported in the 1099-R section ONLY ..   They are NOT contributions so you should not be entering them as such  in the IRA contribution section. 

[Critter-3]

Do you have only one 1099-R for the roll over of both a 401K and a ROTH 401K ?    Or a plan that had both pre tax and post tax  in the same  account and they only sent one 1099-R form ?

[nc cpl]

2 1099-rs. One for the portion that went to the 401K (pretax part) and another for the remainder that went to my Roth (after tax part).

[MarilynG1]

Enter your 1099-R's as issued and pay close attention to the follow-up questions.  You may get additional questions after you complete each 1099-R entry.

The Codes in Box 7 on your 1099-R's indicate the type of transaction being reported. 

Click this link for more info on Entering 1099-R's in TurboTax.

[nc cpl]

This is not a question about entering a 1099-R

[Critter-3]

All you need to do is enter both of the 1099-R forms and answer the follow up questions in that section. 

Unless you made a separate IRA contribution outside of these roll overs there is nothing you need to enter in the IRA contribution section. 

[AnnetteB6]

Even though the after-tax amount that was sent to the Roth IRA is shown as 'taxable' on your Form 1099-R, it does not mean it will automatically be reported as taxable on your return.

When you enter Form 1099-R and answer the follow-up questions to indicate that the distribution was rolled into a Roth IRA, the amount will be reported on your Form 1040 with 'rollover' and no taxable amount included in your income.  

@nc cpl

[nc cpl]

You're referring to Form 1040, Line 4b  (under Line 4a IRA distributions). It currently reads "rollover" and has zero in the right column. Is this correct?

[RobertB4444]

That would certainly be an example of a 1099-R that is not taxable.

[tmninja]

When I enter my 1099-R from my 401K in-service withdrawal/distribution of the After-Tax contribution and the associated earnings (Mega Backdoor Roth rollovers) the follow-up questions only seem to give the options to indicate all of the money was rolled over to a Roth IRA.  Some of the distribution (the After-Tax contributions) was rolled over to my Roth IRA and the rest of the distribution (the untaxed earnings) was rolled over into a Rollover IRA.  The questions don't seem to let you say both.  If I say "Yes, this money was rolled over to a Roth IRA account", it tries to tax the earnings which went into a separate Rollover IRA.  If I say "No, this money wasn't rolled over to a Roth IRA account" it doesn't tax any of it, but then it doesn't increase my basis in my Roth IRA on the IRA Worksheets for the After-Tax contributions that rolled over to the Roth.  How can I get it to show some rolled to Roth and some rolled to a tIRA (actually a Rollover IRA)?  Thanks! 

[macuser_22]

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@tmninja wrote:

When I enter my 1099-R from my 401K in-service withdrawal/distribution of the After-Tax contribution and the associated earnings (Mega Backdoor Roth rollovers) the follow-up questions only seem to give the options to indicate all of the money was rolled over to a Roth IRA.  Some of the distribution (the After-Tax contributions) was rolled over to my Roth IRA and the rest of the distribution (the untaxed earnings) was rolled over into a Rollover IRA.  The questions don't seem to let you say both.  If I say "Yes, this money was rolled over to a Roth IRA account", it tries to tax the earnings which went into a separate Rollover IRA.  If I say "No, this money wasn't rolled over to a Roth IRA account" it doesn't tax any of it, but then it doesn't increase my basis in my Roth IRA on the IRA Worksheets for the After-Tax contributions that rolled over to the Roth.  How can I get it to show some rolled to Roth and some rolled to a tIRA (actually a Rollover IRA)?  Thanks! 

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TurboTax does not directly support a single 1099-R going to two different destinations.

What you must do is split the 1099-R into two 1099-Rs.

For the amount rolled to the Traditional IRA.

1) In box 1 use the original 1099-R box 1 minus the box 5 amount.

2) Box 2a = 0.

3) Box 5 = blank.

4) Box 7 = G.

5) Answer NO to the two interview questions that ask about a Roth - the default is a Traditional IRA.

For the amount rolled to the Roth IRA.

1) In box 1 enter the original box 5 amount.

2) Box 2a - 0.

3) Box 5 = original box 5 amount.

4) Box 7 = G.

5) Answer NO to the first interview question about a 401(k) Roth and YES to the rollover to a Roth IRA.

That should properly report the 1099-R. The box totals of the two 1099-R should equal the amounts on the original 1099-R.

Nothing about splitting into two 1099-R's go on a tax return - the IRS only gets the dollar amounts on the 1040 form.