No. The box 5 is NOT an IRA contribution.
Assuming that this as a designated Roth distribution then box 5 is your contributions to the 401(k) Roth at your employer. It is NOT a Roth IRA.
If you are rolling it to an IRA then keep track of the box 5 contributions that can be applied to the Roth IRA basis when you take a distribution form the IRA.
What is the code in box 7 of this Form 1099-R?
What did you do with this distribution?
I have this problem also .. and it's H in box 7 .. direct Roth401k-to-RothIRA. Why anyone would care about cost basis in this transaction is beyond me. Unfortunately, TT had taken this box 5 amount and added to the IRA worksheet as taxable at conversion. My and other Roth401k distribution (1099 H-type) did not put anything in box 5 .. very difficult to calculate what I contributed (to Roth401k) over the years but who needs that anyway. Can I simply choose to not enter box 5 so TT won't get confused ?
Yes, because it sounds like your direct Roth 401K was a designated Roth 401K. According to the Turbo Tax on demand tax guidance, this could also represent the basis you have in your designated Roth account. The designated Roth after tax contributions may be taken out tax-free.
It could also be the portion of your insurance premiums you paid that can be taken out tax-free. Another entry could be the nontaxable portion of a charitable gift annuity.
You might wish to contact the trustee of your Roth account to find out what the is basis represents and why it was reported in Box 5 of the 1099R.
I agree and because there's another 1099 issue from same company. Just wanted to make sure it wouldn't be a problem if I don't enter box 5 into TT in case revised 1099's aren't coming.
Thanks
@RC519 , I am unable to reproduce what you are describing. TurboTax does propagate the amount from box 5 to your basis in Roth IRA contributions on the IRA Information Worksheet as required but has no effect on tax liability (except possibly lowering tax liability if one separately enters a code-J or -T Form 1099-R for a distribution from a Roth IRA). If you fail to enter the box-5 amount, TurboTax will not track your Roth IRA contribution basis correctly (unless you correct it manually) and that could affect the calculation of the taxable amount of nonqualified Roth IRA distributions this year or in the future, if any.
The plan administrator is required to track Roth 401(k) basis. The payer should always show an amount in box 5 of a code-H Form 1099-R so that the IRS will know the amount of contribution basis that transfers to your Roth IRA in case you ever make nonqualified Roth IRA distribution. When the tax code reverts after the year 2025, it could also affect whether you qualify for a deduction for unrecoverable basis if your investments lose value.
Since there is no tax withholding shown, yes, you can omit the amount from box 5 as long as you separately correct TurboTax's tracking of your Roth IRA contribution basis. With no tax withholding, the Form 1099-R details are omitted from your e-filing, so the IRS won't know the difference.
I had two 401k lump-sum distributions last year. The two companies handled everything differently.
Having a cost basis for the smaller Roth rollover and nothing for the larger rollover and nothing for what's in the Roth IRA already after many conversions is not even going to close.
I also don't "get" why anyone needs to know my cost basis for my Roth IRA. Frankly I don't even know it since it's been populated completely with after-tax from conversions and roll-overs. What legislation might affect a Roth .. the back door conversions .. I don't think I'm doing any of that anyway.
I would be interested in knowing more and I could easily be missing something.
I prefer not to put numbers on worksheets if they are totally inaccurate. As long as omitting box 5 is okay, this issue should be fine. I may call the issuer but I suspect getting a re-issue without box 5 is not "in the cards".
Please Advise
@RC519 wrote:
I had two 401k lump-sum distributions last year. The two companies handled everything differently.
Having a cost basis for the smaller Roth rollover and nothing for the larger rollover and nothing for what's in the Roth IRA already after many conversions is not even going to close.
I also don't "get" why anyone needs to know my cost basis for my Roth IRA. Frankly I don't even know it since it's been populated completely with after-tax from conversions and roll-overs. What legislation might affect a Roth .. the back door conversions .. I don't think I'm doing any of that anyway.
I would be interested in knowing more and I could easily be missing something.
I prefer not to put numbers on worksheets if they are totally inaccurate. As long as omitting box 5 is okay, this issue should be fine. I may call the issuer but I suspect getting a re-issue without box 5 is not "in the cards".
Please Advise
If you are under age 59 1/2 you can withdraw your own contributions (cost basis) from your Roth IRA at any time tax and penalty free. That is why you need to track the cost basis.
Ah, makes sense. Since my CB has not been tracked thus far, I see no way to accurately start now, and I am over 60. The only value would be in what dmertz said .. to possibly deduct unrecoverable loss in future. My Roth is comprised of 5 years of conversions and 2 rollovers. You'd think I could retrieve an accurate cost basis ? I could try. Please Advise
Given that you've done Roth conversions, your Roth IRAs will likely be your last choice for source of funds that you need to spend, making it unlikely that you'll have an overall loss when you distribute the last of your Roth IRA savings. Under these circumstances, having unrecoverable basis is unlikely.
OK thanks .. I may tap the Roth eventually .. and would type in a more-accurate cost basis if I could create one.
I see my Roth IRA has a column with cost basis for the various holding .. I can tally those, add that box 5 # and still have no clue what to do for the larger Roth401k-to-Roth rollover since that 1099 provided no such info.
Your thoughts appreciated.
Back to the Box 5 # for which I did separate 1099's ..
One that I split was a code G so I did both in the split as code G .. got the right questions, all good.
The other split was a code 7 so I tried to do both as a code 7 .. didn't get the right questions so ..
I did that one as a code G (not an H since it's not a Roth401k to RothIRA) got the right questions, ok ?
Does it really matter that I deviated from the box 7 code to get the correct result for the box 5 entry ?
Appreciate a consensus, thanks
The column for cost basis on your Roth IRA statement just indicates the purchase price of the current investments. It's not useful as an indication of Roth IRA contribution or conversion basis. Since your Roth IRAs are fully qualified, it's unlikely that you'll ever need to know your Roth IRA contribution and conversion basis.
You should be able to split the code 7 Form 1099-R and indicate for each that you moved the money to another retirement account. For the portion moved to Roth I think that you need to indicate that you did a combination and then just indicate that the entire amount being entered on the that 1099-R was converted to Roth.
On the code 7 Form 1099-R there should have been tax withholding, so you shouldn't substitute code G for code 7 since the details of Forms 1099-R with tax withholding are included in your e-filing.
Thank You ! .. that worked just as you said. I feel better splitting the 1099 by using same code as original. I had no w/h on either but did have taxable in 2, and NUA in 6. Having that after tax in 5 was apparently too much.
So in each of two cases I pulled out box 5 into it's own 1099 entry, reduced box 1 on the original by that amount, and used same codes in box 7 as orig. BTW one was a code 7, one was a code G and both had box 5 amounts for Roth. The third "alteration" was .. as we discussed, just not entering the cost basis on a code H which also resided in box 5. Thank You ! ( I need to start a new topic for wrongful 2210 calculations & penalty)
Guess I spoke too soon about the last 1099 (code H .. Roth401-to-RothIRA) for which I omitted the box 5 entry .. If I enter this "cost basis" .. TT adds it to the rollover from Roth401k and in cumulative (line 51). My other code H had the same amount in box 5 as box 1 .. If I do this the worksheet (IRA Wks) is populated correctly. I was okay NOT entering the cost basis, but a bit uncomfortable entering a different amount to get the proper result :(.
It seems the 1099 is correct as is .. why is TT software is using box 5 vs box 1 to populate the IRA Wks ?
In the past TurboTax has had bugs (known ones were subsequently fixed) that have caused inappropriate interactions on TurboTax's 1099-R Summary among various Forms 1099-R when multiple Forms 1099-R are entered. Perhaps that is happening here.
Rather than entering "different #", I entered as it appears on 1099r and used the right-click override to make the IRA w/s correct (on line 34). Line 51 copies from 51 automatically. I figure that's for my own records anyway.
Please let me know if anyone thinks I should "work this" differently. Thanks
It's likely that the override will prevent you from e-filing.
Ah .. guess I'm back to entering the box 1 amount as if it were also in box 5 .. to appease TT software.
Since I have this issue as well as the two other "splits" needed to avoid other mis-uses of box 5 entries,
Any chance this could be fixed instead ? Would this be the place to request a fix ? Thanks