In-Plan Conversion Roth 401k , After-tax paycheck contributions

[freeanswers42]

I have a Roth in-plan conversion in my 401k so every year I max out my normal 401k Roth contribution to the usual IRS limit, then contribute the additional amount up to the extended annual limit (in 2021, the normal Traditional +Roth 401k limit was $19,500 , and with the Roth In-Plan Conversion you could add more to a Roth 401k account up to a total of $58,000 Trad + Roth 401k for people ages 49 and under)

My 1099-R shows my after-tax money In-Plan contribution (above the normal IRS limit) as Gross distribution (Box 1) and Taxable amount of 0 (Box 2a). The distribution code (Box 7) is G, Direct rollover of a distribution to a qualified plan

How is this properly entered in Turbotax?   When I use the Wages & Income section for 1099-R,  and enter in the information above, I eventually get to a screen that examines my 401k contributions and concludes that I've overcontributed by the amount of the allowed Roth In-Plan Conversion additions.   (in the 2021 example:  $38,500,   which is the overall special limit of $58,000 less the $19,500 normal IRS limit).     Is that a problem?  Or as long as my IRS 1040 form  Line 5b (pensions and annuities taxable amount)  shows 0  ,  am I good to go that this allowed extra contribution wont' be treated as an amount subject to fed tax?

[dmertz]

The Form 1099-R for the IRR and its entry into TurboTax has nothing to do with determining whether or not you have overcontributed to the 401(k).

You post indicates that you are using TurboTax Premier online, so I'll assume that you are not self-employed and that these contributions are made through an employer that provides you with a W-2.  Since you are under age 50, the sum of any amounts reported with codes D, E, F, S, AA and BB (codes D and AA in the case of a 401(k)) in box 12 of your Form(s) W-2 are not permitted to exceed the annual limit ($19,500 for 2021, $22,500 for 2023).  After-tax contributions to the traditional account in the 401(k) are not reportable on your W-2, so if you contribute the annual maximum to the designated Roth account in the 401(k), the only code  related to your retirement contributions in box 12 of your W-2 should be code AA.  

[freeanswers42]

Thanks for your reply; you are correct  that i'm not self-employed and that my W2 shows the maximum amount contributed under code AA ($19500 in 2021, etc)

The 1099-R that i have received from Fidelity the last two years details the extra amount of Roth 401k  ( above the W-2 AA / IRS limit) that is allowed to be contributed from paycheck deductions through the "Roth In-Plan Conversion" program.  

This is Fidelity's guide to that program:

https://nb.fidelity.com/bin-public/070_NB_PreLogin_Pages/documents/tva_RothInPlanConversionGuide.pdf

My core issue is when I enter in this 1099-R information in TurboTax, it ultimately leads to a page where Turbotax cautions me that i've contributed more than the allowed amount to 401k during the year and that i may be subject to penalties, etc.  

 Yes I contributed more than the $19,500 normal limit in 2021 but the Roth In-Plan Conversion  is part of an exception to that normal limit.    

To me this indicates that Turbotax may not have been updated to incorporate the Roth In-Plan Conversion program and recognize that the total amount of 401k contributions allowed in a year is higher than the normal IRS limit if a Roth In-Plan Conversion has been established. 

I hope that helps clarify the situation.  i'm just trying to make sure that I enter that information in correctly to Turbotax so the extra contributions aren't coded as taxable , or some penalty payment calculated, where there should be none

[dmertz]

When you enter a code-G Form 1099-R that has $0 in box 2a and indicate that it was rolled over to a Roth 401(k) or Roth 403(b), that's the end of anything having to do with the Form 1099-R.  The only thing that TurboTax does with this information is include on Form 1040 line 5a the amount from box 1 of the Form 1099-R and exclude it from line 5b with the ROLLOVER notation.  Nothing about a Form 1099-R indicates the years for which the contributions being rolled over were made, so it's impossible for TurboTax to infer anything about excess contributions from the entry of the Form 1099-R.

"My core issue is when I enter in this 1099-R information in TurboTax, it ultimately leads to a page where Turbotax cautions me that i've contributed more than the allowed amount to 401k during the year and that i may be subject to penalties, etc.'

Exactly what is TurboTax saying?  Excess contributions to a 401(k) cannot result in any penalties (only additional future ordinary income taxes), so perhaps you are mistakenly entering these contributions as IRA contributions and TurboTax is noting that you made an excess IRA contribution that is subject to penalty.  Make sure that you are not entering anything about this anywhere under Deductions & Credits.  A 401(k) is not an IRA.  Enter amounts shown in box 12 of your W-2 only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax.