Roth IRA contribution withdrawl taxable

[ash11]

@dmertz  - Here is what all I have done in regard to 1099-R(s) and incorporated the changes now as you suggested. I have reported 3 different 1099-R info in Turbo Tax.

1. 1099-R to show the rollover from 401-K to traditional IRA.
2. 1099-R to show the rollover from 401-K to ROTH IRA

      Turbo Tax only presents the following question in this order, and these are my responses now.

• Is this 1099-R reporting a rollover of funds from a 401(k), 403(b), or government 457(b) plan to a designated Roth 401(k) or Roth 403(b) plan? Answered: Yes
• Did you make any after-tax contributions to your 401(K) or 403(b) plan? Answered: Yes
• Was this money received as a public safety officer? Answered: No

       No further questions are presented on this IRA

     3.  1099-R to show the withdrawal of fund from ROTH IRA

• Did I inherit the IRA from Fidelity? Answered: No
• Was any part of the money you withdrew from this Roth IRA used to buy your first home? Answered: No
• Was this a qualified disaster distribution? Answered: No
• Did I owe any Roth IRAs since before 2015? Answered: No
• Was Roth IRA open on December 31, 2019? Answered: No  (It was opened earlier in 2019)
• Roth IRA Contributions prior to 2019. Answered: Left blank
• Tell us the year that I converted a traditional IRA to a Roth IRA: Marked 2018 box (This to me is lying to TurboTax but not on tax return as I never converted traditional IRA to Roth IRA.  Rather rollover of fund from 401-K to Roth IRA happened in 2019)
• 2018 Nontaxable Conversions: Entered the Form 1099-R box 5 amount (Amount transferred to ROTH IRA)

Updated Forms generated by Turbo Tax

• The IRA information worksheet generated has now only line 7 (Basis in Roth IRA conversions) populated with contributions made to Roth IRA
• On the Form 8606 – Part III this is what I see now
  • Line 19 (total nonqualified distributions from Roth IRAs in 2019: $$ withdrawn from Roth IRA
  • Line 20 (Qualified first-time homebuyer expenses): Empty
  • Line 21 (Subtract line 20 from line 19): $$ withdrawn from Roth IRA
  • Line 22 (Enter your basis in Roth IRA): Empty
  • Line 23 (Subtract line 22 from line 21): $$ withdrawn from Roth IRA
  • Line 24 (Enter your basis in conversions from qualified retirement plans to a Roth IRA): $$ Box 5 Amount (amount rolled over to Roth IRA)

Please acknowledge if this looks correct now. I sincerely appreciate your patience in helping me out. I mistook you thinking that you might be from Intuit. 

[dmertz]

Yes, your Form 8606 now correctly shows your conversion basis on line 24 and no contribution basis on line 22.  That is the goal of the workaround.

[JE52]

Are principle withdrawl from roth taxable

[AnnetteB6]

No, if you receive a distribution from a Roth IRA that does not exceed the basis of the IRA (your contributions), then the distribution is not taxable.

However, you must enter the basis of the Roth IRA into TurboTax in order for the distribution to be treated correctly.

Use the information below to do so:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “Roth IRA” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to Roth IRA”
• Click on the blue “Jump to Roth IRA” link

This will bring you to a screen with check boxes to indicate what types of account you had in 2019.  Be sure that Roth IRA is checked.  Click Continue. 

If Traditional IRA is checked or if you have a spouse that had either type of account, the next questions will not pertain to your Roth IRA.  Continue through this section until you are asked whether you made any contributions to your Roth IRA for 2019.  This is the beginning of the section where you will enter details about your Roth IRA, including the basis.

Continue answering the questions according to your situation.  On the screen where you see Let Us Track Your Roth IRA Basis, click Yes. 

Then, on the screen titled Enter Prior Year Roth IRA Contributions, this is asking for your total contributions for years prior to 2019 (basis).  If your basis exceeds your distribution, then the distribution will not be taxable.  If the distribution exceeds your basis, then the excess will be taxable.

Finish the rest of the follow-up questions about your Roth IRA. 

@JE52