Tax Year Prior to 2020: 1099-R and Form 5498

[macuser_22]

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@aridenour99 wrote:

The allocation of my IRA 1099-R Distribution was mixed; part in actual withdrawal (cash), part transferred into a Roth IRA, part Rolled back into the IRA under the 2020 no-RMD wavier.

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Assuming you mean by "no-RMD waiver" you qualify for the COVID related roll back.

Unfortunately this is a situation (two destinations - rollover and Roth conversion) that TurboTax does not support on a single 1099-R.

You must split the 1099-R into two using the exact same data except box 1 and 2a.

Enter the amount of the Roth conversion in box 1 and 2a in one 1099-R and answer the RMD question that NONE of it was a RMD, then say you moved the  money to another retirement account and did a "combination of things".  Enter the amount if the Roth conversion in the bottom box.

Enter the amount of the rollover and cash in box 1 and 2a in the other 1099-R and answer the RMD question that NONE or to was a RMD, then say you moved the  money to another retirement account and did a "combination of things".  Enter the amount rolled over in the top box. 

The resulting 1040 form line 4a should now have the total of the original 1099-R box 1 and line 4b should have that taxable amount of the Roth conversion and the amount taken in cash.  With and explanation statement next to it.

NOTE: it you had any tax withheld in box 4 then include that on the second 1099-R and it will also be taxable income on the 1040 line 4b.

[rtmtmac]

I did a RMD in March 2020, but rolled it back pursuant to the CARES Act. I got the 1099 - R and Form 5498.  I followed your instructions for handling this situation in TurboTax, but I believe it results in an unintentional problem. While the net effect is zero for taxation of the distribution and subsequent rollback,  the distribution still inflates  the amount of taxable Social Security benefits.  As such, I wind up with a higher taxable income than I should. Accordingly, I have elected to not input my 1099-R and plan to file manually with a copy of the 1099-R and Form 5498.  Any suggestions on how to handle?

[macuser_22]

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@rtmtmac wrote:

I did a RMD in March 2020, but rolled it back pursuant to the CARES Act. I got the 1099 - R and Form 5498.  I followed your instructions for handling this situation in TurboTax, but I believe it results in an unintentional problem. While the net effect is zero for taxation of the distribution and subsequent rollback,  the distribution still inflates  the amount of taxable Social Security benefits.  As such, I wind up with a higher taxable income than I should. Accordingly, I have elected to not input my 1099-R and plan to file manually with a copy of the 1099-R and Form 5498.  Any suggestions on how to handle?

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A 5498 is information and does not get filed.

I suggest deleting the 1099-R and re-enter as above saying that is was NOT a RMD.   If there is no taxable amount on the 1040 line 4b then it CANNOT add to your AGI, therefore cannot have any effect on the taxable social security that is based on AGI.

[DC51]

My issue is slightly different: When I requested funds from my IRA, broker transferred funds to my checking account. I then requested broker to return funds to IRA, and then transfer to my Roth.  In addition I have regular monthly amounts coming out of IRA going directly to a lender to pay down a mortgage.  The 1099-R issued by broker included the funds transferred to my checking, which subsequently went back to original IRA. Thus the 1099-R was overstated by that exact amount. If I import the overstated 1099-R into turbotax, what do I need to do to reduce it by the double-counting? The 5498's I received show the funds going back to account as a contribution, and the other shows it as a conversion to Roth. So 5498's are correct. Turbo tax says "delete the original 1099-R, and create 2 new ones.  Can't I keep the overstated one, and then create the 2 new ones?

[macuser_22]

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@DC51 wrote:

My issue is slightly different: When I requested funds from my IRA, broker transferred funds to my checking account. I then requested broker to return funds to IRA, and then transfer to my Roth.  In addition I have regular monthly amounts coming out of IRA going directly to a lender to pay down a mortgage.  The 1099-R issued by broker included the funds transferred to my checking, which subsequently went back to original IRA. Thus the 1099-R was overstated by that exact amount. If I import the overstated 1099-R into turbotax, what do I need to do to reduce it by the double-counting? The 5498's I received show the funds going back to account as a contribution, and the other shows it as a conversion to Roth. So 5498's are correct. Turbo tax says "delete the original 1099-R, and create 2 new ones.  Can't I keep the overstated one, and then create the 2 new ones?

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You have two different thing going on here that cannot be entered into TurboTax with a single 1099-R.

The 1099-R you have is correct because it reports the total of the first distribution that was put back, the amount converted to a Roth and the amount withdrawn to pay pay the mortgage.    As long as your entries equal the 1009-R is should be fine.

First delegate anything that you have entered and start over.

Make both 1099-R entries into TurboTax exactally the same - same payer information, box 7 code, box 2b checked, IRA box checked,  checked, but different box 1 and 2a amounts.

For the amount converted to the Roth.    On one 1099-R screen, enter the amount converted in box 1 and box 2a.   Answer the followup question that you moved the money and then did a combination of things.    Enter the amount converted in the lower box (convert box).   And continue to the screen to add another 1099-R.

For the 2nd 1099-R, In box 1 and 2a enter the REMAINDER of the total distribution form the 1099-R that you received (that will include the overstated amount) into box 1  and 2a.   Again say you did a combination for things,  in the top (rollover) box enter the total amount that was first put back.   Leave the bottom box blank.  (The difference between the box 1 amount and the amount used for the mortgage).

Finish the interview.   If done correctly the resulting 1040 form line 4 should show the original 1090-R box 1 amount on line 4a and the amount converted to the Roth plus the amount that paid the mortgage on line 4b (the taxable amount).

[Also was any tax withheld in box 4 for either the first transfer of funds or the 2nd Roth conversion and distribution?  If it was and not made up with other funds the that box 4 amount must also be allocated between both dummy 1099-Rs according to how it was withheld (for one only or for both).   Any tax withheld and not paid with other funds will add to the 1040 line 4b taxable amount and reduce the amount converted to the Roth or rolled back.]

[DC51]

THANK YOU SO MUCH!!  I followed your instructions and the 1040 turned out correctly and the 2 manual 1099-R's I created balanced to the original 1099-R from the clearing house.

[drofpsych]

Same or similar problem. I received a 5498. My invesment advisor told me I need to enter that into Turbotax. The reason i need to enter it is that under the CARES act, i rolled the money over as I did not need to take the RMD under the CARES act. But nothing I do allows me to enter the 5498 or to indicate that the money was rolled over and should not be taxed, and there should be no penalty. I have read the advice but it does not solve my problem.  

I should add or clafify this is an over 72 RMD where I got a 1099-R. And I do not see where i was asked the questions indicated. 

[PattiF]

Because the CARES Act waived RMDs for 2020, the distribution was not an RMD even if it was originally intended to be an RMD. 

Delete the 1099-R from TurboTax, reenter it exactly as shown on the Form 1099-R provided by the payer.

Then answer the follow-up questions to indicate that none of the distribution was RMD, then indicate that you rolled the money over.

IRS and RMD

[drofpsych]

Thanks for the advice. But still not working. I said that none of the distribution was an RMD, but that did not change anything in terms of being taxed on the amount. I assume it is because I am not telling Turbotax it was rolled over. But where do I tell Turbotax it was rolled over. There is not screen or question to provide that information. Is it somewhere else? 

[drofpsych]

Your advice was helpful - but I keep following the advice, your's and other's, but I never get a screen that says - Next it asks, Tell us if you moved the money through a rollover or conversion. Here will will indicate you
rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days). Any idea why I am not getting that screen. Instead I get a number of screens about whether the IRA was inherited.

[macuser_22]

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@drofpsych wrote:

Your advice was helpful - but I keep following the advice, your's and other's, but I never get a screen that says - Next it asks, Tell us if you moved the money through a rollover or conversion. Here will will indicate you
rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days). Any idea why I am not getting that screen. Instead I get a number of screens about whether the IRA was inherited.

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If a RMD answer that "None of this distribution was a RMD, or "RMD not required". 

[drofpsych]

Thanks but that does not work. The only workaround I could find was to add to the 1099-R information. If I change the distribution code from 7 to G, or add a G, then I get the questions about the rollover. But without doing that, even with checking that it was not a RMD, does not lead to me getting a screen that asks about rollovers.  

[macuser_22]

What code is in box 7?

Is the IRA/SEP/SIMPLE box checked?

Code G cannot be used for a indirect rollover.

[drofpsych]

On the original form, the box that is checked is 7. The problem as I have indicated is that until I changed that to G, or added a G, the questions about was this a rollover do not appear or come up. No matter what I did not get to the rollover questions, until I put a G in the box. I realize that is less than optimal, but it was the only way I could get to the rollover questions. 

[macuser_22]

Was this a RMD you are rolling back?      There was no 2020 RMD so the RMD question must be answered that "None of this distribution was a RMD" or "RMD not required".