IRA conversion

[maskrunner2]

I am retired and have NO earned income. I have my pension and other retirement accounts ( 457, 401K)

While still working I opened a traditional IRA in 2018, For an initial contribution toward 2017 ( 3,000)

a deduction was taken. I had additional money taken out of my payroll until my retirement in Nov.2018

These regular IRA payments were deductable in the years made.

I did an IRA conversion in February 2021 for the entire account of $ 4613. same custodian, trustee to trustee transfer,  Reg. IRA to Roth IRA.  My 1099 for this conversion from the trustee is listing the distribution as a 

code G.  "Rollover",  If I put this code in turbotax it is showing this amount as NON-taxable, I know this is NOT right.  Can I put a different code, such as 1, 2, or 7 ?  The gross distribution box shows 4613, but the taxable is blank.  Taxable amount undetermined is checked as well as IRA/Sep/Simple box.  I was only 58 in 2021, so am I also responsible for the 10% penalty as well? How do i enter this in turbo tax? do I need to put in the code for early distribution (1) even though this is NOT on the tax form ????

[AnnetteB6]

You should contact your IRA custodian for a corrected Form 1099-R.  The distribution code should have been a 1, 2, or 7 instead of a G.  

Even though you know what the distribution code should have been, you should not change it without trying to get it changed through the financial institution.

You are not responsible for any early distribution penalty since it was a conversion of a Traditional IRA to a Roth IRA and not a distribution.

[maskrunner2]

Thank you for the reply,

I did contact them and they seem to think that the code is right. There reply was "we'll look into it", and "no other code describes this transaction".  Really?  And this is from the City of New York !!!

So, in the mean time..... Isnt it my responsibility to put in the proper code ??

There is NO code for a conversion....... everything is a distribution, which technically it is not !!

The only way around it in turbo tax is to use code 1, and then say it was a conversion later in the steps.

There should be an easier way.

[ColeenD3]

Please see this answer from AndreaG.

To report the Traditional IRA distribution and the conversion contribution:

• log in to your Turbo Tax account
• click on "take me to my return"
• click on the "federal taxes" tab
• click on "wages and income"
• choose "show more and "see list of all income"
• scroll down to "retirement plans and social security"
• click on "start" next to "IRAs, 401(k), etc"
• enter the information for your 1099R
• Turbo Tax will ask you questions about your Traditional IRA distribution
• When you reach the screen that says, "what did you do with the money?", choose the option that says, "I moved the money to another retirement account"
• After you choose this option, another set of options will appear:
• If you converted the entire distribution to a Roth IRA, choose "I converted all of this money to a Roth IRA"
• If you only converted some of the distribution to a Roth IRA, choose, "I did a combination of rolling over, converting, and cashing out the money." If you choose this option, Turbo Tax will ask you to identify how much of the distribution was converted to a Roth IRA, and how much of the distribution was rolled over into another retirement plan.
• Next you will the screen that says, "your 1099R entries". Scroll down to the bottom of the page and click "continue". Turbo Tax will ask you more questions and you will need your 5498 Form for your Traditional IRA. A year end statement might also provide the necessary information. 

[maskrunner2]

Thank you.....

FYI-  If I follow the directions given, Turbo tax will not let me continue past entering the Info.

I cannot get to the screen that says " What did you do with the money "!!!

This is because the distribution code  ON my 1099, is  Code G, the taxable amount is blank, and the "taxable amount not determined" , is checked.

The only way I can get to the screen you mention is to put Code 7, or to fill in the taxable amount as the same as the gross distribution.  ( which it is, since I converted the entire balance).

The financial institution is not sending me a corrected form 1099-R

So, again.  I put in the taxable amount, and a code 7 ( normal distribution) and everything works fine. It shows up as taxable IRA on page 1, they deducted my taxes, and NO penalty....

Is it going to be a problem, that I put in a different code then the 1099 R, after all, I am correct ( even though its NOT a true distribution), But it is MY responsibility to enter correctly.  Its the only way Turbo Tax works around this situation.... ( programming fix ?)

All input is appreciated.   SR

[RobertB4444]

The IRS has this reported as a code G.  They're going to try to match this on your return.  A code 7 is a normal distribution, which this is NOT.  The proper code for your 1099-R is code 2 (Early distribution, exception applies)  If you enter this code into TurboTax then the system will ask you questions that will lead to the correct conclusion.  

However, because the code on your return will not match the code on the form that the IRS has this may result in a huge processing delay for your return.  If that isn't important to you then you could file a paper return with a copy of the 1099-R and a written explanation attached.  Or you can put code 2 in the TurboTax system, efile your return and see if you receive communication from the IRS about the issue.