IRA Distribution and Covid

Forum|Forum|5 years ago
February 2, 2021
12 replies
48 views

I had an RMD requirement of about $32K in 2020 and took the distribution in January of 2020. About $13K in taxes were withheld and a net of about $19K was deposited into a brokerage account. Later, the rules changed so that no RMD was required for 2020. Eventually, I found out that since no RMD was required, I could treat the distribution as a rollover to a Roth IRA. I had already paid the taxes, so I directed the financial institution to move the net $19K into my Roth account. However, I recently downloaded the 2020 tax data from the financial institution and they showed a distribution of approximately $51K in 2020. I think this is because when I told them to move the money into the Roth they moved the $19K temporarily back into the regular IRA and then moved it to the Roth. On the 1040, there is line for IRA distributions and another for the taxable amount of the distribution. I can't figure out a way to make the gross distribution number be $51K and the taxable amount number be $32K. Either they are both $51K or both $32K. There is a place to put an explanation of the numbers if I use the $32K numbers for both lines but I would rather it showed the gross on one line and the net on the other. How do I fix this?

Best answer by macuser_22

The box 7 code depends on the type of account that the distribution came from and your age (under or over 59 1/2), not what you did with the money - you tell the IRS that by how it is reported on the 1040 form.

OK - here is how it looks using your numbers on the desktop version and the 8606 form to report the Roth conversion has the $19 on line 16 & 18. With the total and taxable amounts on the 1040 line 4

macuser_22

Alumni - Champ

Do yiu have the 2020 1099-R yet? What amount is in box 1 and 2a?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

macuser_22

Alumni - Champ

If the 1099-R shows the total of both transactions then TurboTax cannot handle two different destinations on a single 1099-R. You will need to split the 1099-R into two.

Allocate the amounts so that one is just the amount rolled back to the IRA and the second the amount converted to a Roth so that the totals add up to the original 1099-R.

Check the 1040 line 4a and 4b for the amount of the total on 4a and the Roth conversion amount on 4b with the word ROLLOVER next to it.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

jesschoenAuthor

Level 2

Using the rounded numbers I used in the post, the 1099-R shows $51K in both box1 and 2a. I also have a 5498 form showing a rollover contribution of $19K.

Are you saying I should break the 1099-R in two, one showing $32K in box1 and 2a and the withheld taxes on that form and another 1099-R showing $19K in box1 and $0 in box 2a and no taxes withheld?