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How do I record a back door roth contribution of $5500 even though our AGI is $224,000

 
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AnnetteB
Intuit Alumni

How do I record a back door roth contribution of $5500 even though our AGI is $224,000

A back door Roth is a term used to describe a method of funding a Roth IRA when your modified adjusted gross income (MAGI) is too high to allow you to directly contribute to a Roth IRA.  A back door Roth consists of opening a Traditional IRA and making a fully non-deductible contribution to the Traditional IRA.  The Traditional IRA can then be converted to a Roth IRA without any income limitations or restrictions on your MAGI. 

Here are the general steps you need to take to report this type of transaction in TurboTax, either the online or desktop version.  First, take care of the Traditional IRA contribution:

  1. Enter “IRA contributions” in the search box located in the upper right corner of the program and initiate the search.
  2. Your top search results will be a link to Jump to the section you need.
  3. Check the box showing that you contributed to a Traditional IRA.  Remember, that is where you initially put the money.
  4. The next screen asks you to verify that you contributed to a Traditional IRA, choose Yes.
  5. The next screen asks if the contribution was a repayment of a retirement distribution, choose No.
  6. Next, enter the amount that was contributed to the Traditional IRA.
  7. The next screen is a little tricky unless you read it carefully.  It is asking if you “recharacterized” the contribution.  This is different from a conversion, so the answer is No.
  8. On the next screen (or two), there will be a question about whether you are covered by a retirement plan at work.  Answer according to your situation. 
  9. Following that, there will be a question about Excess IRA Contributions.  Answer this according to your situation.
  10. Now, we’re at an important step.  The question will be, were there any nondeductible contributions to the IRA.  The answer here is Yes.
  11. The next page asks for the basis of the Traditional IRA.  If you have never made nondeductible contributions in the past and kept them in the IRA, your basis is zero.  Otherwise, enter the amount shown as total basis on your most recently filed Form 8606.

 

That takes care of the first part of the process.  Next, you need to take care of the conversion of the Traditional IRA to the Roth IRA.  When you do this, a Form 1099-R will be issued to report the conversion.  You will simply enter the information from the Form 1099-R into TurboTax using these steps:

  1. Enter “1099-R, distribution from an ira” in the search box located in the upper right corner of the program and initiate the search.
  2. Your top search results will be a link to Jump to the section you need.
  3. Enter the information exactly as it appears on your Form 1099-R.  Pay special attention to Box 2b, Box 7, and the IRA/SEP/SIMPLE check box.  Click Continue.
  4. The next screen is a follow-up question asking whether you inherited the IRA.  Answer No.
  5. The next screen asks what you did with the money.  Answer I moved the money to another retirement account.
  6. Then, choose I converted all of this money to a Roth IRA account to answer the question that appears. 
  7. Finally, there will be a final question to determine whether any of the money was moved back to the traditional IRA.  Answer No.


One more note, if the Traditional IRA earned any money before it was converted to the Roth IRA, those earnings will be taxable on your return. 



View solution in original post

5 Replies
AnnetteB
Intuit Alumni

How do I record a back door roth contribution of $5500 even though our AGI is $224,000

A back door Roth is a term used to describe a method of funding a Roth IRA when your modified adjusted gross income (MAGI) is too high to allow you to directly contribute to a Roth IRA.  A back door Roth consists of opening a Traditional IRA and making a fully non-deductible contribution to the Traditional IRA.  The Traditional IRA can then be converted to a Roth IRA without any income limitations or restrictions on your MAGI. 

Here are the general steps you need to take to report this type of transaction in TurboTax, either the online or desktop version.  First, take care of the Traditional IRA contribution:

  1. Enter “IRA contributions” in the search box located in the upper right corner of the program and initiate the search.
  2. Your top search results will be a link to Jump to the section you need.
  3. Check the box showing that you contributed to a Traditional IRA.  Remember, that is where you initially put the money.
  4. The next screen asks you to verify that you contributed to a Traditional IRA, choose Yes.
  5. The next screen asks if the contribution was a repayment of a retirement distribution, choose No.
  6. Next, enter the amount that was contributed to the Traditional IRA.
  7. The next screen is a little tricky unless you read it carefully.  It is asking if you “recharacterized” the contribution.  This is different from a conversion, so the answer is No.
  8. On the next screen (or two), there will be a question about whether you are covered by a retirement plan at work.  Answer according to your situation. 
  9. Following that, there will be a question about Excess IRA Contributions.  Answer this according to your situation.
  10. Now, we’re at an important step.  The question will be, were there any nondeductible contributions to the IRA.  The answer here is Yes.
  11. The next page asks for the basis of the Traditional IRA.  If you have never made nondeductible contributions in the past and kept them in the IRA, your basis is zero.  Otherwise, enter the amount shown as total basis on your most recently filed Form 8606.

 

That takes care of the first part of the process.  Next, you need to take care of the conversion of the Traditional IRA to the Roth IRA.  When you do this, a Form 1099-R will be issued to report the conversion.  You will simply enter the information from the Form 1099-R into TurboTax using these steps:

  1. Enter “1099-R, distribution from an ira” in the search box located in the upper right corner of the program and initiate the search.
  2. Your top search results will be a link to Jump to the section you need.
  3. Enter the information exactly as it appears on your Form 1099-R.  Pay special attention to Box 2b, Box 7, and the IRA/SEP/SIMPLE check box.  Click Continue.
  4. The next screen is a follow-up question asking whether you inherited the IRA.  Answer No.
  5. The next screen asks what you did with the money.  Answer I moved the money to another retirement account.
  6. Then, choose I converted all of this money to a Roth IRA account to answer the question that appears. 
  7. Finally, there will be a final question to determine whether any of the money was moved back to the traditional IRA.  Answer No.


One more note, if the Traditional IRA earned any money before it was converted to the Roth IRA, those earnings will be taxable on your return. 



mark77_
New Member

How do I record a back door roth contribution of $5500 even though our AGI is $224,000

I'd like to audit my past ten previous years of tax returns using the back door Roth IRA process. How do I proceed with request? 

How do I record a back door roth contribution of $5500 even though our AGI is $224,000

@mark77_ If you have been using online TurboTax, the stored returns go back only seven years.  The IRS and TurboTax save returns for seven years; older returns are purged.

 

  You have to access your own account and/or  print it for yourself using exactly the same account and user ID that you used when you prepared the return.

 

https://ttlc.intuit.com/community/prior-year-return/help/how-do-i-access-my-prior-year-return/01/270...

 

Many people have multiple TT accounts and forget how to access them.  Log out of the account you are in now.

 

Account recovery

https://myturbotax.intuit.com/account-recovery/

https://ttlc.intuit.com/questions/1901535-forgot-your-turbotax-online-user-id-or-password

Or did you use the desktop version of TurboTax?  If so, the files are on your own hard drive or any backup device you used like a flash drive.

 

https://ttlc.intuit.com/questions/1901486-how-many-turbotax-accounts-do-i-have

https://ttlc.intuit.com/questions/1901535

https://ttlc.intuit.com/questions/1901659-find-your-tax-data-file-in-mac

https://ttlc.intuit.com/questions/1900721-find-your-tax-data-file-tax-file-in-windows

 

To get a copy of your previously filed returns prepared with online TurboTax https://ttlc.intuit.com/questions/1900748-how-do-i-get-a-copy-of-a-return-i-filed-in-turbotax-online

 

https://ttlc.intuit.com/questions/1900748-how-do-i-get-a-copy-of-a-return-i-filed-this-year-in-turbo...

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

How do I record a back door roth contribution of $5500 even though our AGI is $224,000


@mark77_ wrote:

I'd like to audit my past ten previous years of tax returns using the back door Roth IRA process.


What does that mean?    Exactly what are you trying to accomplish?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

How do I record a back door roth contribution of $5500 even though our AGI is $224,000

The "Backdoor Roth" does not exist in tax law. It is a procedure used by some to take advantage of a quirk in tax law that allows making a non-deductible contribution to a Traditional IRA when one cannot contribute to a Roth IRA, and the immediately converting the Traditional IRA to a Roth IRA, thereby getting the money into the Roth via "backdoor".

That "procedure" can only work of all these requirements are met:
1) No Traditional IRA account whatsoever can exist (that includes any SEP or SIMPLE IRA accounts) at the start.
2) The Tradition IRA contributions must be reported on a 8606 form as non-deductible.
3) The conversion to a ROTH must be shortly after the contribution to avoid taxable gains.
4) The entire Traditional IRA value must be zero that the end of the year of conversion.

Otherwise the conversion will be partly taxable.


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