How to enter Traditional to Roth conversion Rollover contribution in the turbotax online version ?

[shishirshah]

Trying to enter BDA IRA to ROTH IRA. After entering the 1099R info, I do not see the steps that says "What did you do with your money". It only says if I put into my own IRA account or NOT. So please clarify. This distribution is from BDA IRA to ROTH IRA. 

[shishirshah]

Thanks for your reply.  Distribution code is 4 (Death) since it is inherited IRA account. 401K Plan was converted to IRA BDA plan 2018. This was the first distribution taken. When I entered the 1099R info in Turbo-tax, only question it asked me was if I moved to my own IRA or NOT.  No option to say it moved to Roth IRA.

Please guide me how to report IRA BDA distribution converted to Roth IRA.

[dmertz]

@shishirshah , presumably you inherited this IRA from your spouse.

This is a bit of an unusual transaction, seemingly permitted by the tax code and regulations, but TurboTax doesn't really accommodate this transaction and I'm not sure that the IRS instructions for Form 8606 anticipate this transaction either.  You can get what is probably an appropriate result on lines 4a and 4b of Form 1040 as well as in your conversion basis on TurboTax's IRA Information Worksheet by telling TurboTax No, you did not inherit this IRA from ..., then indicating that you moved the money to another retirement account, that you did a combination of rolling over, converting or cashing out, then indicating the amount converted to Roth.  Be aware, though, that this approach only works if neither you nor your spouse had any basis in nondeductible traditional IRA contributions, otherwise TurboTax will commingle the basis on your Form 8606.  It's also not clear from the IRS instructions for Form 8606 whether this transaction should appear on your Form 8606, on a separate Form 8606 related to the BDA IRA or on no Form 8606 at all.  Doing as I described will put it on your own Form 8606, but it seems to me that it would be more appropriate for it to appear on a separate Form 8606 related to the BDA IRA.

If your spouse had no basis in nondeductible traditional IRA contributions, it would be more straightforward to transfer or roll over amounts form the BDA IRA to your own traditional IRA, then do the Roth conversion from your own IRA.  These two separate transactions are well understood and are addressed in IRS guidance.

[shishirshah]

Thanks for your answer. BDA IRA is setup in surviving spouse's name. BDA IRA does not cause any penalty for early withdrawals. Based on what I read up on IRS website, one can convert BDA IRA to Roth IRA as long as BDA IRA is related to Spouse. Turbo tax does calculate correctly this as an income reporting on line 4b without early withdrawal penalty. Only problem is that I am not able to show the amount has been added to ROTH IRA. 

[dmertz]

You can either enter the Form 1099-R as I described to get TurboTax to recognize the conversion basis or next year in 2023 TurboTax you can directly modify your 2022 Roth IRA conversion basis to add this amount.

[pdeclerck]

But what if TT does not ask " Did you move this money to a Roth IRA?". Instead it asks "I rolled over all of this money to another traditional IRA or other retirement account (or returned it to same account)".  if you selected it then TT says I wont have to pay tax on the rollover. Wrong!

[AmyC]

Yes, taxable event. Enter the Conversion from a Traditional IRA to a Roth IRA

1. Open your return
2. Go to income section
3. Delete your 1099-R -this will delete your answers to start fresh.
4. Re-enter and leave the taxable amount blank for now
5. Answer None of these apply when you reach the screen Do any of these situations apply to you?
6. Answer from a traditional IRA, continue
7. Inherit no, continue
8. Select I moved the money to another retirement account, 
9. drop down appears, select I did a combination of rolling, converting or cashing out the money,
10. drop down, enter amount converted to ROTH
11. continue
12. HSA, no
13. Continue answering questions until you come to the Your 1099-R Entries screen

@pdeclerck 

[Joseph Braun]

I am 67 yrs. old and did a $30,000 Backdoor Roth IRA in 2022 from my Traditional IRA account.  I bought the Basic Turbotax and it is not getting me to all of the screen steps.  Will the Deluxe version allow me to document this action?  If yes, how do I convert to Deluxe and transfer the information over from Basic?  Thanks, Joe Braun 

[dmertz]

@Joseph Braun ,TurboTax Basic provides everything you need.  There is no need to upgrade.

I'm not sure what you mean by a "$30,000" Backdoor Roth.  The maximum traditional IRA contribution for 2022 is $6,000 plus a $1,000 catch-up.  Or did you make an after-tax contribution to an employer's qualified retirement plan that you subsequently converted to Roth (a so-called mega-backdoor Roth)?

Regardless, the contribution and the conversion are separately-entered transactions.  Which transaction, the contribution or the distribution, are you having trouble entering?

What is the code in box 7 of the Form 1099-R?

Is the IRA/SEP/SIMPLE box marked?

[AbrahamT]

That is correct. For the online version, you will need the Deluxe version or higher.Any version of the CD/downloaded TurboTax will have the required forms. To switch to the higher version of Turbotax, see HERE   and follow the instructions.

[wlms10]

I'm retired and more than 72 1/2.  My income comes from my RMD, SS, and pension,  none of which are considered a salary.  I converted some of my RMD ($7000) into my Roth IRA.  I completed the section (Retirement plans and SS) as suggested and it came out fine.  Do I show the $7000 conversion amount in the ROTH contribution section of (Retirement and investments)?  (Y/N)

If I do, TT tells me I have an excess contribution of the amount I converted and I will owe a 6% penalty each year the money remains in the IRA.  Looking in the "learn more" section it appears that this is only for working individuals.  Is there another help section for retirees that explains this better?

[JulieS]

No, you don't enter the $7000 Roth conversion as a Roth contribution. You just enter the 1099-R that you get for the conversion and answer the follow up questions. 

To review your 1009-R for this conversion:

1. Open your return.
2. Select Federal, then Wages & Income.
3. Scroll down to IRA, 401(k), Pension Plan Withdrawals (1099-R), under Retirement Plans and Social Security, select Start or Revisit to the right.
4. Continue through the screens. When you get to Tell us if you moved the money through a rollover or conversion, select I converted some or all of it to a Roth IRA. 
5. Answer the remaining questions in the section according to your situation. 

[StanleyQ]

I tried your recommended steps but again, upon starting the review process, get the same error message as when I first finished the return:  "Check This Entry. Form 1099-R (name of provider): Partial Roth conversion amount cannot be greater than the amount on line B1, the amount that potentially could be converted to a Roth IRA".  

What I did in 2023:  took out a distribution from a traditional IRA, some of which fulfilled my RMD for the year and the rest I converted to my Roth IRA.  I cannot figure out this whole B section in the TurboTax 1099-R form where this error check points me.

Any suggestions?  Thanks.

[alexnwba]

I used the Premier version for my taxes.

When I reported my RMD and a conversion of some IRA money from traditional to my roth, I did it all through TD Ameritrade.  Everything is placed in the right forms and all I had to do was to verify for myself that it all place appropriately.  Remember, the conversion gets treated just like income.

     On the 1099-R from where you have listed the amount of the conversion, box 2b must be checked.  In my case the "Taxable amount not determined" box get checked.  Go back to the payer information form and you will see that one of the boxes needs to be check depending on what your decision was to pay the tax on the amount of the conversion.

Something tell me that my description of what I did will likely not help you.  If not, I apologize for the inconvenience.

[AbrahamT]

This is what I would suggest

1.  Delete your original 1099R input entry and start from scratch.
2. On the search bar in the upper right hand corner, type in 1099R
3. Enter the information exactly as it is showing from your 1099R with Box 7 indicating that it is a normal distribution
4. Don't check off the box that this is an IRA.  
5.  You'll hit continue for a couple of screens untill you get to this screen

   6-  To which you will answer I moved the money to another retirement account, and then further down the             screen, you will enter the amount of how much was converted to a Roth IRA account

   7-.And sure enough, the partial amount of distribution that was rolled over to the Roth IRA will seamlessly             flow through to Form 1099-R , Line item B2 like this

 

[Edited 02/21/2024:15 pm PST]