Need Help with Step Two Backdoor ROTH IRA Conversion

Forum|Forum|5 years ago
April 15, 2021
1 reply
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I converted $100,000 from my IRA Retirement Account to a newly opened ROTH IRA on 12/28/2020. This is my only ROTH IRA and I have made no other conversions. This money was 80% of my 2020 RMD from my IRA so, of course, I received a 1099-R for my IRA showing a Gross Distribution in Box 1 of $125,000. I have already entered this 1099-R into my TurboTax CD/Download.

I am now trying to follow the instructions for a Back Door Roth IRA Conversion and I completed Step One of the Two-Step Process as outlined by TurboTax. I have Started Step Two and am at #3 where it asks how I want to enter my 1099-R and I have to select Type it in yourself because I have nothing to import but I also do not have a 1099R. It says to follow the instructions but since I do not have a 1099-R for my ROTH, how can I fill in all the Boxes on the 1099-R screen that pops up? All I have is a ROTH IRA ACCOUNT STATEMENT - 2020 ANNUAL STATEMENT from my broker that clearly says CONVERSION on it and $100,000. I also have a tax information statement that reads IRA ACCOUNT FAIR MARKET VALUE FOR THE TAX YEAR 2020 for $100,000. I am stumped at how to fill in the 1099R screen. What do I type in all those Boxes?

Thank you for your help. It was nice of the IRS to give us until May 17th to file but I need to finish by April 15th in order to know how much to send in for my Federal and State 1st Quarterly Estimates. :-C

dmertz

Level 15

Nothing about this involves a distribution or Form 1099-R from a Roth IRA.

You do have a Form 1099-R that includes the distribution that was converted to Roth. It has $125,000 in box 1.

Delete and reenter this 1099-R. Indicate that none of this Form 1099-R was RMD (because RMDs were waived for 2020), indicate that you moved the money to another retirement account, indicate that you did a combination of rolling over, converting or cashing out, then indicate the amount that you converted to Roth.

To reach the page that asks for your year-end value in traditional IRAs, click the Continue button on the page the lists the 1099-Rs that you've entered.

For your estimated taxes, if you have the cash available to do so, you can always overestimate your Q1 payment and adjust your Q2 payment to bring your total for Q1 and Q2 to only the amount necessary to satisfy the safe harbor. It just means that you pay a little bit 2 months early.

MtnTABS

Level 5

Thank you for your help! (All of the following happened in 2020.) If I understand correctly, you are telling me to delete my 2020 IRA1099-R that I entered into TT, start fresh and enter it again. Box 1 is $125,000.00. $100,000 of that converted into my new ROTH IRA on 12/28/2020. The other $25,000 went into my personal checking account. Doesn’t that mean that the $25,000 was a partial RMD for 2020? You said to “indicate that you did a combination of rolling over, converting or cashing out...” so I assume there is a box to check that indicates i.e. “part of Box 1 is a RMD”? I am going to follow your steps and see what happens.

Before reading your suggestion to send in the 1st quarter estimates, at 3:30 a.m. April 15th (today) I wrote out and mailed checks for both Federal and State 2021 1st Quarter Estimates. 2021 will be the first time I will have only myself as a deduction since my spouse passed away 02/24/2020. Trying to figure out the estimates without a completed 2020 return was a big fat guess so I just added a couple thousand dollars to the amounts I paid quarterly in 2020 and will adjust the 2nd Quarter Estimates as needed. My spouse did all our taxes so last year I had to figure out how to turn on his computer (!), find all our previous yearly TT return files, buy a TT CD at Staples and educate myself on everything. I thought my head would explode especially since all his passwords are hidden somewhere in his computer. With all that I am still having much more trouble with the 2020 returns than I did with the 2019 returns. I so appreciate help from you and anyone else.

dmertz

Level 15

Because RMDs were waived for 2020, none of the amount distributed in 2020 was a required distribution (the 'R' in RMD) even though the original intent might have been for it to be an RMD. It's just a distribution.