Entering ROTH Solo 401K Employer (Profit Sharing) contributions

[zubinh23]

I am trying to enter an EMPLOYER PROFIT SHARING contributions in the Solo 401K section of TurboTax Online. 

I am following the instructions in this article: How do I enter a Solo 401(k) in TurboTax?

The article states the following: "Enter your Employer Matching (Profit Sharing) Contributions for 2025.  Note: There's no Employer Matching box for Roth 401(k)s because any matching employee contributions are pretax."

This is completely FALSE and outdated. Roth, AFTER TAX profit sharing contributions are indeed allowed in a Solo Roth 401K beginning with the 2023 tax year. My Solo 401K custodian confirmed this and allows Roth profit sharing contributions. The only issue is that TurboTax does not allow the entry and instead continues to publish incorrect information in a very recently updated article. 

Thank you for any suggestions with resolving this.

[DaveF1006]

TurboTax’s regular Solo 401(k) interview is designed for deductible contributions. Because Roth employer contributions are taxable and not deductible, they aren’t included in the usual retirement deduction sections. Here is how to enter as taxable income.

Enter as a "Substitute" 1099-R (The IRS Recommended Method)

The IRS requires these contributions to be reported on Form 1099-R with Code G (in Box 7) for the year they are allocated to your account. Your custodian should eventually issue you a 1099-R for this. If they haven't yet, or you are filing before it arrives, you can enter a "Substitute" 1099-R in the Retirement Plans and Social Security section in your personal return..

• Box 1 (Gross Distribution): Enter the Profit Sharing amount.
• Box 2a (Taxable Amount): Enter the same amount (since you are paying tax on it now).
• Box 7 (Distribution Code): Enter Code G.

After this is entered, there is a follow-up section where you will check that this is a substitute 1099R. 

[zubinh23]

Thanks for trying but your answer does not make sense. A 1099R is issued for Distributions only. I am talking about how to enter a profit sharing Contribution in Turbotax.

[AmyC]

If you have gone through the employer matching contributions section of the program, you will note that many plans are there, but not the SOLO ROTH 401k. The IRS actually requires you to enter your solo ROTH 401k contributions for two reasons: 

• It must be recorded as a contribution to your plan and 
• it must be taxed as income to you. 

The IRS approved method to report this is - a 1099-R for the year the funds are allocated. The code G in box 7 is the key. It tells the IRS the money when into a ROTH account. You can follow the steps outlined by @DavidF1006 above.

The 1099-R directions states that Roth  contributions  must be reported on Form 1099-R for the year in which the contributions are allocated. See Q&A L-9 of Notice 2024-2.

Reference: IRB 2024-2