Roth Cal Savers

[jepnkcp]

Contributions are deducted from paycheck and forwarded to my Cal Savers Roth IRA.  Turbo Tax is asking what contributions were made prior to 2025.  Is this the amount deducted from paycheck and forwarded to Cal Savers. 

[MindyB]

Yes.  When you add the contributions that you made before the beginning of 2025, this will be added to your 2025 contributions to find your basis. 

Your basis in a Roth may not be needed this year, but it is easier to track it every year than later when you need it, since Roth IRAs allow tax and penalty free withdrawals of basis regardless of age.

[jepnkcp]

When I enter this amount, my refund increases.  Why.  A distribution was takenin in 2025 and I received 1099-R.  Don't understand how when I enter prior years contributions amount it increases refund amount.  Just want to make sure doing this right.

[MindyB]

It sounds like you are doing this correctly.  Because you took a distribution, entering in those past contributions let the IRS know you have already paid tax on that money, so that's why your refund went up.

Before you entered it, you were being taxed on the distribution in excess of current year's contributions.  But now, more (or possibly all) of that distribution is tax-free since you made contributions in prior years.  Since you reported that you already paid tax on that income, you are not charged again this year when you withdrew it.