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sinanyavas
New Member

Does the Roth Rollover have a new MAGI limit? I have previously funded a traditional IRA and rolled it over to a Roth. This year, I get a message about a 6% penalty.

The specific message I get is as follows...

You Have an Excess Roth Contribution


Roth IRAs offer some great benefits, but they have restrictions too.

Part or all of Sinan's contribution to Sinan's Roth IRA isn't allowed due to certain restrictions on Roth IRAs.

Based on the information you've entered so far, these situations apply to you:


Your contribution is over the allowed limit of $5,500 ($6,500 if age 50 or older).


Your modified adjusted gross income, $XXX,XXX, is too high. Learn More





Because your contribution isn't permitted, it's considered an excess contribution of $5,500.


You Currently Have a Penalty



Because Sinan made an excess contribution of $5,500 to Sinan's Roth IRA, Sinan will owe a 6% penalty ($330) each year that excess money remains in the IRA.

But don't worry. You can remove this penalty by taking action before April 18, 2017 (or October 16, 2017, if you're filing an extension). What can I do?

Enter any excess contribution that you withdrew before April 18, 2017 (or October 16, 2017, if you're filing an extension).


Note:
You must pay the penalty every year until the situation is fixed.



Excess Contribution Withdrawn Before Due Date of Your Return
1 Best answer

Accepted Solutions
MichaelL1
Level 15

Does the Roth Rollover have a new MAGI limit? I have previously funded a traditional IRA and rolled it over to a Roth. This year, I get a message about a 6% penalty.

I think you are entering it in the wrong area.  The rollover is on a 1099R and does not go in the contribution  area (as it is not a contribution).  

So first take the rollover to a Roth out of the IRA contribution area.  

Then enter the 1099R as a rollover.  There is no limit.  This link may be helpful.

https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-...

To enter the rollover in TurboTax, go to:

 To enter pension and annuity Payments (1099-R)

  • Click on Federal Taxes 
  • Click on Wages and Income 
  • Click on I'll choose what I work on (if shown)
  • Scroll down to Retirement Plans and Social Security
  • On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button
  • Enter this and then answer the questions it was rolled to a Roth IRA.  

View solution in original post

3 Replies
MichaelL1
Level 15

Does the Roth Rollover have a new MAGI limit? I have previously funded a traditional IRA and rolled it over to a Roth. This year, I get a message about a 6% penalty.

I think you are entering it in the wrong area.  The rollover is on a 1099R and does not go in the contribution  area (as it is not a contribution).  

So first take the rollover to a Roth out of the IRA contribution area.  

Then enter the 1099R as a rollover.  There is no limit.  This link may be helpful.

https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-...

To enter the rollover in TurboTax, go to:

 To enter pension and annuity Payments (1099-R)

  • Click on Federal Taxes 
  • Click on Wages and Income 
  • Click on I'll choose what I work on (if shown)
  • Scroll down to Retirement Plans and Social Security
  • On IRA, 401(k), Pension Plan Withdrawals (1099-R), click the start or update button
  • Enter this and then answer the questions it was rolled to a Roth IRA.  

View solution in original post

dmertz
Level 15

Does the Roth Rollover have a new MAGI limit? I have previously funded a traditional IRA and rolled it over to a Roth. This year, I get a message about a 6% penalty.

See TurboTaxMichaelL1's answer that you should not have entered under Deductions & Credits anything regarding this Roth conversion.  Go back and remove it from there.

There is no MAGI limit for performing a Roth conversion.  That was eliminated by changes to the tax code effective beginning in 2010.
sinanyavas
New Member

Does the Roth Rollover have a new MAGI limit? I have previously funded a traditional IRA and rolled it over to a Roth. This year, I get a message about a 6% penalty.

Thank you for your responses.  You are absolutely correct in that I was mistakenly entering my rollover as an contribution to the Roth IRA, in addition to the 1099R entry I had under the "Wages & Income" tab.  Following your guidance cleared up the penalty message I was getting.  I appreciate it.
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