The Roth IRA opened in 2012 was with American Funds. I believe the rule is that if you had any Roth IRA older than 5 years, a distribution from any other Roth IRA will still qualify for no taxes due. How do I enter this in Turbotax?
After you enter the data for the 1099-R, continue.
The next screen probably asks about disaster distributions. Answer No (unless it is) and continue.
The next screen will probably ask you "Owned Any Roth IRA for Five Years?"
Answer Yes, and then continue where you need to keep answering stuff.
The first is were any Roth IRAs open on 12/31/2020. I presume that this is to establish that you didn't close the Roth IRA(s) in 2013.
The next is to ask if you withdrew from the Roth IRA before 2020. This question goes with the next one which asks how much you contributed to the Roth IRA(s) before 2020.
In other words, it is trying to establish that you are still withdrawing your basis (which is tax-free).
Then there are a few more questions, and if all goes well, the distribution will be tax-free (not on line 4b on the 1040).
Thanks BillM223. Unfortunately, after all that, Turbotax still added the tax for my Roth IRA distribution. So I chose to submit a replacement Form 4852 which will hopefully bring it to someone's attention at the IRS and I'll get a reduced tax (or by that time, maybe a refund of the overpayment).
@lpayton8178 wrote:
The Roth IRA opened in 2012 was with American Funds. I believe the rule is that if you had any Roth IRA older than 5 years, a distribution from any other Roth IRA will still qualify for no taxes due. How do I enter this in Turbotax?
Are you over age 59 1/2?
What code is in box 7?
If under age 59 1/2 then any earnings distributed are taxable and subject to an early distribution penalty.
Code T is a qualified distribution except the insurer did not know if you had an Roth for 5 years or more. If you did then answer yes to the 5 year questions and there will be no tax.