IRA conversion to Roth IRA

Forum|Forum|5 years ago
April 17, 2021
1 reply
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In 2019 I did a conversion of 30000 from a traditional IRA to a new Roth IRA (created for this transfer). I followed the panels as stated in the turbo tax instructions and I still ended up with the 6% penalty which has now carried over to 2020. I know I have to consider the 30000 as income in 2019 but I can't get the program to remove the penalty. The money was moved to the Roth IRA in 1 day. I have been trying to do a 2019 amended return so I can remove the penalty and then not be taxed or penalized in 2020. I can't seem to make it work. The 1099-R show it as a 7 distribution of IRA. Can I get a better explanation of what needs to be done in the panels. I did select that it was being moved to a Roth IRA but it still shows up. I have the desktop version of Turbotax

DanaB27

Level 15

Do not enter the conversion as a Roth IRA contribution under Deductions & Credits. You will only enter the 1099-R and indicate in the follow-up questions that this was a conversion. Please go through the follow-up questions carefully.

Login to your TurboTax Account
Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
Then choose “I did a combination of rolling over, converting, or cashing out money.” and enter the amount next to "Amount converted to a Roth IRA account"
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contribution to your IRA?"
Answer the questions about the basis and value

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

leslieannebartonAuthor

Level 2

Thank you for your quick response. I followed your instructions exactly. I understand I need to taxes on the distribution from my IRA. However, the Roth IRA is still causing a penalty of charge of 6% which carries over to my 2020 taxes. I didn't put anything in deductions about the Roth IRA.

In my form 5329 I found this:

Part IV Additional Tax on Excess Contributions to Roth IRAs. Complete this part if you contributed more to your Roth
IRAs for 2019 than is allowable or you had an amount on line 25 of your 2018 Form 5329. (neither is true as it is a conversion but it continues to show up and I never took anything out in 2018. This started in 2019)
18 Enter your excess contributions from line 24 of your 2018 Form 5329. See instructions. If zero, go to line 23 18
19 If your Roth IRA contributions for 2019 are less than your maximum allowable
contribution, see instructions. Otherwise, enter -0- . . . . . . . . . 19
20 2019 distributions from your Roth IRAs (see instructions) . . . . . . . 20
21 Add lines 19 and 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
22 Prior year excess contributions. Subtract line 21 from line 18. If zero or less, enter -0- . . . . . . 22
23 Excess contributions for 2019 (see instructions) . . . . . . . . . . . . . . . . . . 23
24 Total excess contributions. Add lines 22 and 23 . . . . . . . . . . . . . . . . . . 24
25 Additional tax. Enter 6% (0.06) of the smaller of line 24 or the value of your Roth IRAs on December 31, 2019 (including 2019
contributions made in 2020). Include this amount on Schedule 2 (Form 1040 or 1040-SR), line 6, or Form 1040-NR, line 57 25
For Privacy Act and Paperwork Reduction Act Notice, see your tax return instructions. Form 5329 (2019)
[social security number removed]
30,000.
0.
0.
30,000.
30,000.
1,800.