Why does Turbo Tax ask for the total of all my Traditional IRA accounts? I am under age 60 and not making withdrawals, so there should be no need for this information.

[saratogasteve]

After entering the value of my total contributions to my Traditional IRA, Turbo Tax Deluxe, a version which does not contain retirement planning advice modules, asked me how much money is in all of my Traditional IRA accounts. That sounds like personal information which is not necessary to calculate an IRA deduction. Why is this question asked, and what are the consequences of providing an answer?

[SweetieJean]

Did you actually start to enter a withdrawal? Or enter your DOB wrong?

[SweetieJean]

Maybe this?
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2853766-are-the-2-screens-tell-us-the-value-of-all-your-traditiona...>

[macuser_22]

I don't see that question in the IRA contribution section unless there was a  1099-R entered in the 1099-R section and you have a basis in the IRA.   I cannot get that question to come up in the contribution interview.   Suggest that you return to the contribution section and un-check the Traditional IRA box the  continue and delete the contribution.   Then return to that section and re-enter the contribution.

[dmertz · Accepted solution]

If TurboTax asks for your year-end balance immediately after you have entered your traditional IRA contribution, it's because TurboTax believes that you have made an excess contribution.  The 6% excess contribution penalty is calculated on the lesser of the excess contributions in your traditional IRAs or the year-end balance for the tax year of the contribution.

Regarding the excess contribution, make sure that you have not entered as a regular traditional IRA contribution any contribution to a workplace retirement plan.  Also, to make a regular traditional IRA contribution you must have sufficient eligible compensation to make the contribution.  Compensation is generally income reported in box 1 of your W-2 (minus any amount in box 11) or net earnings from self-employment.  Also, any amount of earnings on which you claim a Foreign Earned Income Exclusion is not eligible compensation.  If you are married and your income is less than that of your spouse, your IRA contribution can also be based on the eligible compensation of your spouse.  The maximum permissible regular traditional IRA contribution for 2017 is $5,500, plus $1,000 catch-up if age 50 or over in 2017.

[macuser_22]

Right - I forgot about excess contributions.  That can easily happen at this time of the year if entered the IRA contributions but have not received or entered your W-2's so TurboTax thinks you do not have enough income to contribute, but TurboTax should have had a screen telling you that it is excess.

[rleehb001]

Well, I didn't contribute to an IRA, so why is TT asking for my total IRA balance?  Also, it says this information is send to you on form 5498. I didn't get such a form. I really wish TT would say why it is asking so I can either look up year end statements or ignore this.  Also what does "Outstanding Rollovers" mean?  Much better to say Rollovers In Progress.   

[Hike4fU]

I also did not add any assets to my IRA this year, but it still asked for my yearend total value.  I didn't provide it because TurboTax gave no reason as to why they needed the information.  

[bredman]

The question is not triggered by TT suspecting an excess contribution since it asked me this question even though I made no contributions to my IRAs.

I did do a Roth conversion from my traditional IRA to my Roth IRA. Since the withdrawal from the traditional IRA for the Roth conversion is documented by a 1099-R, there is no need for the requested information on the total value of the traditional IRA accounts with reference to form 5498, which is not even due out until May, after the tax filing deadline.

I still have not seen a good explanation as to why TT asks for this information. I suspect that there is no good reason.

[JulieS]

The year end value of your IRA is used on Form 8606 to calculate the taxable portion of an IRA distribution when there are nondeductible contributions in the account. 

This is also the reason that the basis on your IRA account is tracked in the interview. 

If you aren't taking IRA distributions, or if you have no nondeductible contribution to recover, skipping this entry will not impact your return. 

[bojoe01]

Hi, I was following this until the reason was stated why the total value of my traditional IRA is needed.Let me give my example:

-In 2015 I contributed to my Traditional IRA $6500 as a non-deductible IRA contribution. When filing my taxes that year  I submitted an 8606 for a non-deductible IRA of $6500.

-Then in 2022 I took a $6500 distribution from my traditional IRA, assuming there is not any tax implication as I already paid taxes on that money.

- I received a 1099-R that stated: Gross Distribution - $6500, Taxable amount not determined, Normal Distribution.

- I answered 'Yes' to the question on 'Any Non-Deductable Contributions in your IRA?
- The next step asked for my basis in which I entered $6500.-Everything up to that point was fine in Turbotax-Deluxe as it did not impact my tax.

-Then TT asked for the value of all my traditional IRA's and when I entered that value which is quite large. TT then says I owe more taxes.

Why does it matter what my traditional IRA balance is and why is this needed? I am only taking a distribution of the same amount ($6500) that I made for a non-deductible contribution?

[LindaS5247]

It is asking what your year end balances are to make sure you are not making an excess contribution to your IRA's.  

Make sure you have not entered an employer retirement account as a Traditional IRA and check all of your income entries to make sure that they are accurate.

 Click here for information regarding Traditional IRA limits.

[fanfare]

if you made only contributions, and entering the true amount bothers you,

for year end value enter the amount of your contribution.

for distributions or conversions, the real value is needed on certain worksheets.

see dmertz answer above.

 It's your own tax return with your own data on it so why the concern?

If you have a basis in IRAs, you will have to enter the year-end total value for any distribution or conversion,

and it will appear on Form 8606.

[bojoe01]

Hi, just to confirm then to ensure TT computes my taxes  accurately.

- in 2022 I have not entered any contributions to either a traditional IRA, Roth IRA or since not working (68 years old)  any other retirement plan contribution.

- I am only taking a distribution of $6500 from a previous non-deductable contribution of $6500 that I submitted an 8606 form in a prior year.

- It seems from the posts above that in my situation I do NOT have to enter in the value of my traditional IRA balance. Since if I do enter the value of my traditional IRA balance then TT increases the Federal Tax Owed amount. TT doesn't seem to handle situations like mine correctly and implies I need to enter this value in the workflow of the program.

Do I understand this correctly?

[BillM223]

Most (All) of the answers above presume that there is a penalty that shows on your form 5329. 

Can you see your form 5329? If so, can you look at the form and tell us on what lines you see numbers (any numbers) appear? This might reduce the amount of thrashing about that we need to do considerably.