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Level 1
June 6, 2019
Solved

How do I enter the non-taxable portion of a non-deductible Traditional IRA rollover to a Roth IRA in Turbo Tax. My financial institution doesn't calculate this, so I filled out a form F8606, but I can't find a way to enter this information.

  • June 6, 2019
  • 1 reply
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You've got something here that is sometimes called a "Backdoor Roth"

A Backdoor ROTH conversion consists of two parts

  1. The nondeductible contribution
  2. The non-taxable distribution

To record the nondeductible contribution in TurboTax Deluxe do the following:

  • Federal Taxes >> Deductions & Credits >>Scroll Down to >> Traditional and Roth IRA Contributions
  • Select >> Start/Update
  • Traditional IRA and Roth IRA >> Select >> Traditional
  • Did (Name) Contribute To a Traditional IRA  >> Select >> Yes
  • Was This a Repayment of a Retirement Distribution? >> Select >> No
  • Tell Us How Much You Contributed >> Fill In as appropriate >> Select >> Continue
  • Did You Change Your Mine? >> Select >> No
  • Retirement Plan at Work >> Select >> Yes/No
  • Any Excess IRA Contributions Before 2016 >> Select >> Yes/No
  • Any Nondeductible Contributions to (Name) IRA? >> Select >> Yes >> Select >> Continue
  • Let’s Find Your IRA Basis >> Fill In as appropriate >> Select >> Continue
  • Income Too High To Deduct an IRA Contribution >> Select >> Continue
  • Choose Not to Deduct IRA Contributions >> Select >> Yes >> Select >> Continue
  • Your IRA Deduction Summary >> Your IRA Deduction >> $0 >> Select >> Continue

Now we’ll report the Non-taxable distribution into the Roth

  • Federal Taxes >> Wages & Income >> Select >> I’ll choose what I work on
  • Scroll Down to >> Retirement Plans and Social Security >> IRA, 401(k), Pension Plan Withdrawals (1099-R) >> Select >> Start/Update
  • Your 1099-R >> Select >> Yes >> Select >> Continue
  • Let Us Enter Your 1099-R >> Select >> I’ll type it myself >> Select >> Continue
  • Tell Us Which 1099-R You Have >> Select >> 1099-R >> Select >> Continue
  • Fill In as appropriate >> Select >> Continue
  • Let Us Know a Little More About This Distribution >> Select >> From a traditional IRA
  • Is this IRA subject to an early withdrawal penalty >> Select >> No >> Select >> Continue
  • Did (Name) Inherit This (Name) IRA? >> Select >> No >> Select >> Continue
  • What Did You Do With The Money From Fidelity? >> 
  • Select >> (Name) moved the money to another retirement account >>
  • Select >> (Name) converted all of this money to a Roth IRA >> Select >> Continue
  • Move Funds? >> Select >> No (Name) left the money in the Roth IRA >> Select >>Continue

1 reply

Answer
June 6, 2019

You've got something here that is sometimes called a "Backdoor Roth"

A Backdoor ROTH conversion consists of two parts

  1. The nondeductible contribution
  2. The non-taxable distribution

To record the nondeductible contribution in TurboTax Deluxe do the following:

  • Federal Taxes >> Deductions & Credits >>Scroll Down to >> Traditional and Roth IRA Contributions
  • Select >> Start/Update
  • Traditional IRA and Roth IRA >> Select >> Traditional
  • Did (Name) Contribute To a Traditional IRA  >> Select >> Yes
  • Was This a Repayment of a Retirement Distribution? >> Select >> No
  • Tell Us How Much You Contributed >> Fill In as appropriate >> Select >> Continue
  • Did You Change Your Mine? >> Select >> No
  • Retirement Plan at Work >> Select >> Yes/No
  • Any Excess IRA Contributions Before 2016 >> Select >> Yes/No
  • Any Nondeductible Contributions to (Name) IRA? >> Select >> Yes >> Select >> Continue
  • Let’s Find Your IRA Basis >> Fill In as appropriate >> Select >> Continue
  • Income Too High To Deduct an IRA Contribution >> Select >> Continue
  • Choose Not to Deduct IRA Contributions >> Select >> Yes >> Select >> Continue
  • Your IRA Deduction Summary >> Your IRA Deduction >> $0 >> Select >> Continue

Now we’ll report the Non-taxable distribution into the Roth

  • Federal Taxes >> Wages & Income >> Select >> I’ll choose what I work on
  • Scroll Down to >> Retirement Plans and Social Security >> IRA, 401(k), Pension Plan Withdrawals (1099-R) >> Select >> Start/Update
  • Your 1099-R >> Select >> Yes >> Select >> Continue
  • Let Us Enter Your 1099-R >> Select >> I’ll type it myself >> Select >> Continue
  • Tell Us Which 1099-R You Have >> Select >> 1099-R >> Select >> Continue
  • Fill In as appropriate >> Select >> Continue
  • Let Us Know a Little More About This Distribution >> Select >> From a traditional IRA
  • Is this IRA subject to an early withdrawal penalty >> Select >> No >> Select >> Continue
  • Did (Name) Inherit This (Name) IRA? >> Select >> No >> Select >> Continue
  • What Did You Do With The Money From Fidelity? >> 
  • Select >> (Name) moved the money to another retirement account >>
  • Select >> (Name) converted all of this money to a Roth IRA >> Select >> Continue
  • Move Funds? >> Select >> No (Name) left the money in the Roth IRA >> Select >>Continue

Level 3
February 13, 2024

This is not working correctly in latest turbotax online

I made non deductible contribution to IRA. Followed all the instructions here.  When i fill up 1099-R form in turbotax, it still adds tax.  On form 1099R, if i make Box2a - 0 , then it correctly removes the additional tax. 

For some reason, turbotax is still not able to recognize Box2a as non taxable income.

Level 15
February 13, 2024

You should not change any information that was reported on your Form 1099-R, enter it exactly as you have received it.  

 

Entering a backdoor Traditional IRA to Roth IRA conversion can be tricky as it is a two-step process to report it completely.  In general, it is a non-taxable event, but if the Traditional IRA distribution included any earnings or previous deductible contributions, then the conversion will incur some income tax on those amounts.

 

Take a look at the following TurboTax help article to be sure you covered all the steps:

 

How do I enter a backdoor Roth IRA conversion?

 

@firedrake123 
 

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