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Level 2
posted Feb 29, 2020 11:08:42 AM

Enter Prior Year Roth IRA Contributions

I contributed $18500 to a Roth cumulatively before 2014,  plus did some taxable conversions in 2012 through 2014. I withdrew $35,000 in 2017 and $30,000 in 2019 from the Roth. So when TT asks for Roth IRA Contributions prior to 2019 (and TT automatically put in $18500), what is the correct answer? Zero, because by definition all of the contributions are gone and only the conversions are left?

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1 Best answer
Level 15
Feb 29, 2020 11:37:54 AM

Your $35,000 distribution in 2017 reduced your Roth IRA contribution basis to $0.  With everything entered properly into 2017 TurboTax, TurboTax would have carried forward $0 of contribution basis to 2018 and from there to 2019 to appear as $0 Roth IRA contribution basis in 2019 TurboTax, not the $18,500 that presently appears in 2019 TurboTax.

 

Your $35,000 distribution in 2017 also reduced your Roth conversion basis by $16,500 (assuming that you had that much conversion basis in 2017), reducing the oldest contribution basis first.  If you were under age 59½ at the time of the distribution in 2017 and your Roth conversions in 2012 were less than $16,500, some portion of that $35,000 distribution would also have been subject to a recapture of the 10% early-distribution penalty.  As of 2019, though, all of your conversions had met the 5-year conversion holding period, so any of the $30,000 distribution in 2019 that was from your conversion basis, perhaps all of it, is tax- and penalty-free (or all tax- and penalty-free if you were over age 59½ at the time of the distribution).

3 Replies
Level 15
Feb 29, 2020 11:37:54 AM

Your $35,000 distribution in 2017 reduced your Roth IRA contribution basis to $0.  With everything entered properly into 2017 TurboTax, TurboTax would have carried forward $0 of contribution basis to 2018 and from there to 2019 to appear as $0 Roth IRA contribution basis in 2019 TurboTax, not the $18,500 that presently appears in 2019 TurboTax.

 

Your $35,000 distribution in 2017 also reduced your Roth conversion basis by $16,500 (assuming that you had that much conversion basis in 2017), reducing the oldest contribution basis first.  If you were under age 59½ at the time of the distribution in 2017 and your Roth conversions in 2012 were less than $16,500, some portion of that $35,000 distribution would also have been subject to a recapture of the 10% early-distribution penalty.  As of 2019, though, all of your conversions had met the 5-year conversion holding period, so any of the $30,000 distribution in 2019 that was from your conversion basis, perhaps all of it, is tax- and penalty-free (or all tax- and penalty-free if you were over age 59½ at the time of the distribution).

Level 2
Feb 29, 2020 12:20:13 PM

Thanks. A couple of clarifications: The first Roth contribution was in 2010 so well past the five-year mark. And I'm 75 now so no early withdrawal penalties. And yes, it is entirely possible/likely I entered the wrong numbers into TT before, but I'm pretty sure I haven't run afoul of the tax rules. So it looks like I should put zero for the contributions minus withdrawals. Then the net of conversions minus recharactsrizations (TT had this right). Again, thanks for the help.

Level 15
Feb 29, 2020 4:54:33 PM

Since your distributions are now qualified distributions, your basis in Roth IRA contributions and conversions is no no longer relevant to determining the taxable amount of your Roth IRA distributions, they are all now tax free.