How do you report after tax 401K rollover to Roth IRA, with profits being moved to a traditional IRA? TurboTax is reporting profit as taxable on 1040, Line 4d.

[DavidD66]

You should have received two Forms 1099 for the distributions from your 401(k). 

After you enter(ed) the 1099-Rs, there is a page that asks "What Did You Do With The Money From [Retirement Plan]"?

Be sure you indicate that you "rolled over all of this money to an IRA or other retirement account (or returned it to the same account)." 

Answering these questions correctly will result in your distribution showing up as non-taxable.

[dmertz · Accepted solution]

Such a split distribution is not required to be reported on separate Forms 1099-R, but TurboTax can only accommodate the reporting by splitting the Form 1099-R into two for entry into TurboTax, one for the after-tax portion going to the Roth IRA and the other for the pre-tax portion going to the traditional IRA.  With no tax withholding, the details of how you entered this will not be included in your filing, so the IRS will not know that you had to do this workaround to TurboTax's limitation.

[PayingFairShareAndThenSome]

What steps do I need to take in TT to accomplish this workaround? 

[JohnB5677]

To post the 1099-R.

On sidebar 

1. Select Federal 
2. Wages & Income 
3. Select Wages and Salaries, or Revisit 
4. Scroll to Retirement Plans and Social Security
5. Select the type of income.
   1. IRA, 401(k), Pension Plan Withdrawals (1099-R)
   2. Social Security (SSA-1099, RRB-1099)
   3. Canadian Registered Pension Income
6. At this point you can edit an existing document of [Add another 1099-R]
7. If a new 1099-R continue to Let's import your tax info
8.  You can import by selecting your provider. 
   1. Follow the instructions.
9.  or [Change how I enter my form]
10. [Type it Myself]
11. Post your information.
12. If you have a taxable amount that is different from the total amount, enter it in Box 2a.
13. Continue the interview to
    1. Tell us if Cynthia moved the money through a rollover or conversion.
    2. Select I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days).
14. Did (You) rollover all of this $(Full Amount) (Box 1) to another retirement account?
    1. Respond No, (You) rolled over less than $(Amount).
    2. Enter the amount rolled over.  most likely the taxable amount from Box 2a.
15. Complete the interview.

The screens below show a $3,400 distribution, with a $2,000 taxable amount.