Backdoor Roth Issue

[soljarag]

Hello,  I think I'm missing a 1099-R, but want to make sure.

Here is the timeline of my issue:

03/01/2021 - Made a $6,000 contribution to my Roth IRA

12/20/2021 - Did an Excess Contrib Withdraw to pull out the $6,000 since I am above the income limit

12/20/2021 - Opened an IRA account

03/22/2022 - Made a non deductible $6,000 contribution to the IRA for 2021

04/05/2022 - Converted the IRA to a Roth.

As of right now, I have only 1  1099-R that  shows a J8 code,  and I THINK that is the  Excess Contribution Withdraw.

Should I also have a 1099-R that shows the conversion? 

Thanks!!

[macuser_22]

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@soljarag wrote:

Hello,  I think I'm missing a 1099-R, but want to make sure.

Here is the timeline of my issue:

03/01/2021 - Made a $6,000 contribution to my Roth IRA

12/20/2021 - Did an Excess Contrib Withdraw to pull out the $6,000 since I am above the income limit

12/20/2021 - Opened an IRA account

03/22/2022 - Made a non deductible $6,000 contribution to the IRA for 2021

04/05/2022 - Converted the IRA to a Roth.

As of right now, I have only 1  1099-R that  shows a J8 code,  and I THINK that is the  Excess Contribution Withdraw.

Should I also have a 1099-R that shows the conversion? 

Thanks!!

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No.  Since the conversion was done in 2022 you will receive the 1099-R next year to go on your 2022 tax return.

Be sure you enter the 2020 non-deductible Traditional IRA contribution to produce a 2021 8606 form with the $6,000 on lines 1,3 and 14.   You will need the line 14  amount for the 2022 1099-R next year.

[AnnetteB6]

Not yet.  Even though you made the non-deductible contribution to the Traditional IRA for 2021, the actual conversion to the Roth IRA took place in 2022.  You will receive a 2022 Form 1099-R reporting the conversion, which will then be reported on your 2022 tax return.

As for the Form 1099-R with code J8, you are correct about what it is reporting.

[soljarag]

Ok, Thanks!

So If I do another conversion in 2022 (for my 2022 non-deductible contribution) will that be an issue (can I convert $12,000 in 1 year?)

[DanaB27 · Accepted solution]

No, it won't be an issue. You can make a nondeductible contribution for 2022 and then convert it in 2022.

Next year on your 2022 tax return:

To enter the nondeductible contribution to the traditional IRA for 2022:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” since you had a nondeductible contribution in 2021.
9. Enter your $6,000 basis in the Traditional IRA from your 2021 Form 8606 line 14.
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

To enter the 1099-R conversion: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs.

[macuser_22]

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@soljarag wrote:

Ok, Thanks!

So If I do another conversion in 2022 (for my 2022 non-deductible contribution) will that be an issue (can I convert $12,000 in 1 year?)

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Your 2022 1099-R should be the total of both.

In addition to my prior post, the 2022 non-deductible contribution must also be entered in the IRA contribution interview to put the 2020 $6,000 amount on the 2022 8606 line 1, the line 2 amount is from line 14 of the 2021 8606 so the total of $12,000 should be on line 3.