1099R conversion from Rollover IRA to a Roth

[CGSRwr]

I changed jobs last year and Rolled my retirement account to a Rollover IRA, then converted the Rollover to a Roth IRA. I received two 1099 R's, one was for the money that was converted and deposited into my Roth, the other was for the tax money that was sent directly to the IRS. On the one that was for the Tax money that was sent directly to the IRS, the question is do I click "moved the money to another retirement account" or "did something else with it (cash out etc.)" I didn't take cash out and it was sent directly to the IRS.

[DanaB27]

To confirm, you received one Form 1099-R for the rollover (work retirement account to IRA) and one Form 1099-R for the conversion to Roth IRA (from the traditional IRA). The Form 1099-R for the conversion has taxes withheld in box 4.

If I misunderstood and you received one Form 1099-R where the whole distribution went to the IRS then this is considered cashed out and you would select "did something else with it (cash out etc.)"

For the rollover (if the code in box 7 isn't G indicating the direct rollover) you will select “I moved it to another retirement account” and "I rolled all of the money to an IRA...".

For the conversion, you will select “I moved it to another retirement account”, then “I did a combination of rolling over, converting, or cashing out money.” and enter the amount that was moved into the Roth next to "Amount converted to a Roth IRA account". Please be aware, if you didn't replace the taxes withheld with other funds then this is considered a distribution (cashed out). Only enter what you moved into the Roth (the rest is considered cashed out).

[CGSRwr]

I actually received three 1099 R's. One was for the rollover from my previous job to my Rollover IRA, one was for the amount that went from my Rollover IRA to my Roth IRA account, and the Third was for the money that went from my Rollover IRA to the IRS to cover taxes for my conversion. The amount of the third 1099R had the Federal income tax and state tax withheld amounts in lines 4 and 14 that equaled the Gross distribution amount on the 1099R

[DanaB27]

Yes, the third Form 1099-R will be considered cashed out since you used the distribution to pay the IRS (choose "did something else with it (cash out, etc.)"). This assumes that you didn't use other funds to replace the taxes withheld (didn't use your cash to put this amount into the Roth IRA).

If you are under 59 1/2 you will be subject to the 10% early withdrawal penalty for this distribution.

[Edited 2/25/2023 |12:24 pm PST]

@CGSRwr 

[CGSRwr]

Thank you

[dmertz]

DanaB27's last reply assumes that you did not substitute other funds to complete the conversion of the entire gross amount distributed from the rollover IRA.  If you did substitute other funds for the entire amount  of the tax withholding, that would mean that you converted the entire gross amount to Roth.