I had only pension income this year. How do I enter a backdoor conversion of trad ira to ROTH ira?

To clarify, you made the nondeductible contribution to traditional IRA in prior years and reported it on Form 8606. Please be aware, if you only had pension income, then you cannot contribute to an IRA since you need taxable compensation (Wages, salary, etc.). Please see IRS IRA Contribution Limits for more details.

 

Please follow these steps to enter your 1099-R for the conversion:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “1099-R”
3. Click on “Jump to 1099-R”
4. Click "Continue" and enter the information from your 1099-R
5. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
6. On the "Your 1099-R Entries" screen click "continue"
7. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
8. Answer the questions about the basis and value

 

 

 

My situation is similar. My income is strictly from SSA and from my State's retirement system. There is no earned income. No W2 forms. I am using TurboTax Premier 2020. The questions asked when entering my 1099-R information concerning my retirement pension from the state makes me think that I could do a rollover of some or all of those funds into my Roth IRA. I know that this would be a taxable event. I am happy to pay the taxes on any funds now that I could rollover into my Roth IRA because if I get lucky and make the right investments, my returns on those investments would be non-taxable. I would like to do a rollover of part of my monthly state pension proceeds. From what I could gather, seeing that this would be a taxable event, I would not be held to the 60 day timeframe for rolling over funds received. Also, multiple rollovers could be made. I would not be held to just one a year.  I could possibly rollover funds monthly? Am I understanding this correctly or am I missing something? Also, could you point me directly to the section and page of the 590-A and or 590-B instructions support or deny this approach? I keep finding contradictions and am getting confused.

You cannot rollover income received from a monthly pension such as a state retirement system into a Roth IRA.  In order to do a Roth conversion, you would need to have funds in a Traditional IRA (or rollover funds from the cash balance portion of a pension plan, if eligible, into an IRA).  

 

Only funds held in a Traditional IRA can be converted into a Roth IRA.  When the converted funds are from a deductible contribution or pre-tax funds, they generate a taxable transaction.  When the funds are from a nondeductible IRA, with properly tracked basis, the conversion (done properly) is tax-free. 

 

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