Form 1099-R Smart Worksheet missing HSA funding distributions for Roth IRAs

[vegas_man]

TurboTax 2023 Home & Biz desktop user here.

The 1099-R Smart Worksheet is missing the entry for HSA funding distributions for Roth IRAs but it does have it for traditional IRAs. Per the IRS, you can rollover a Roth IRA the same as a traditional IRA to an HSA – and all the same rules apply.

It appears this is an oversight by TurboTax to not include HSA funding distributions for Roth IRAs in the 1099-R Smart Worksheet. This prevents the entry from populating on Line 10 of Form 8889, which must be reported to IRS for such rollovers.

Is there any chance this can be fixed prior to April 15th?

[BillM223]

As I replied to another one of your posts, this is a design decision. If you will look here, year by year, TurboTax lists features that are not supported.

For 2023, you will see on page 3 #4, the following: "4. Roth to Health Savings Account: The program does not support trustee-to-trustee transfers from a Roth IRA to a Health Savings Account".

So, as you see, this is not a design oversight, but a deliberate choice.

I do not know why this choice was made, but it usually has to do with the lack of demand - in this case, it really doesn't make sense to do a transfer from a Roth IRA to an HSA. You could do it manually or if you wanted to do it taxable Roth IRA amount to HSA for the tax benefit, you would have to write a lot of coding to do it right and would interest few people.

I don't know the reason this time, but as a former tax programmer, you have to draw the line somewhere.

We will list this as a potential enhance for next year.