Roth conversion tax impact

[chempsych]

TT seems to have a bug on Traditional to Roth conversions.

When entering the 1099-R info, the Distribution code from Ameriprise is 2. This corresponds in TT to "Early distribution, exception applies". This is incorrect. It should correspond to code 1 in TT "Early distribution (except Roth IRA)". Anyway, this is a taxable event so I chose code 1 in TT.  I see my Federal Refund come down at the top of the screen which is correct. But then a few screens later What did you do with money from Ameriprise? I choose "moved the money to another retirement account", "did a combination of rolling over, converting, cashing out", then fill in the box Amount converted to a Roth IRA. At that point the Federal Refund goes back to the higher figure. This in incorrect. I have to pay tax on the amount I converted. How do I get around this? 

[dmertz]

You must enter the From 1099-R as received.  You must not change the distribution code.  Code 2 just means that no "extra" tax applies, i.e., no early-distribution penalty.

By inappropriately changing the code to 1, you are causing TurboTax to treat the distribution as subject to a 10% early-distribution penalty until you indicate that the distribution was converted to Roth.

To determine if the distribution is being tax properly, examine Form 1040 line 4b to see that the taxable amount is present.