Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
wsshealy
New Member

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

 
9 Replies
Hal_Al
Level 15

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

You, most likely, answered something wrong in the interview and it's being treated as a distribution, rather than a conversion. Review form 8606. A distribution will be on line 15c; a conversion on line 18.

After entering the 1099-R, the interview will ask what you did with the money. Convert to Roth IRA is an option. If you did not check converted the full amount, you'll be asked to enter  an amount.
Hal_Al
Level 15

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

A 2nd possibility is that you entered the conversion as a Roth Contribution and you're being penalized for the excess contribution.  A conversion is only entered at the 1099-R screens. It is not entered at the Roth Contributions interview
wsshealy
New Member

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

It was entered as a conversion.  Form 8606 shows a conversion on line 18.
Hal_Al
Level 15

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

What line on the form 5329 is the penalty on and is there a code?
Do you have any other 1099-Rs,  a 1099-Q or distributions from Modified endowment contracts,  ESAs, QTPs,  MSAs, HSAs, or ABLE accounts.?
dmertz
Level 15

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

Have you installed the latest updates to TurboTax?  Early versions of 2018 TurboTax mistakenly treated as subject to penalty any indirect Roth conversions of a distribution from a traditional IRA reported with code 1.  This problem was corrected with the February 28 release of 2018 TurboTax.
wsshealy
New Member

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

Response to Hal_Al's questions:  Only one 1099-R and none of the other items.  Box 7 of 1099-R shows distribution code 7 (Normal Distribution).
Response to dmertz's:  I have CD version.  I have made all the updates that have been made available since I loaded the disc on 3/16/2019.
dmertz
Level 15

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

What is the code in box 7 of the Form 1099-R provided by the payer?
Is the IRA/SEP/SIMPLE box marked?

What Part of Form 5329 shows a penalty?  Form 5329 is used to report nine different possible penalties.  If the penalty is shown on Part IV, as Hal_Al suggested as a possibility, you mistakenly entered the conversion as a new, regular Roth IRA contribution.

I'm not sure what you are referring to as "excess of $6,500."  You are not limited in the amount that you are permitted to convert to Roth.
wsshealy
New Member

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

Thanks for the responses.  I've gone back through the steps in the interview.  And I had recorded the conversion as a contribution (in addition to the conversion).  That has fixed the problem.   
Hal_Al
Level 15

I converted traditional IRA (excess of $6500) to Roth IRA in 2018 with no contributions to either in 2018. Why the additional tax for this conversion on Form 5329?

Thanks for letting us know!
Dynamic AdsDynamic Ads
Privacy Settings
v