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Level 1
posted Feb 15, 2022 9:31:58 AM

ROTH iRA Conversion

I retired in Aug 2021. I rolled over my 401K to a Traditional IRA in September 2021.  In Jan 2022,  I opened a Traditional IRA for $7,000 dollars. This IRA was non deductible due to income limits. I converted it into an existing  ROTH in Jan 2022.  

 

The $7,000 IRA contribution is listed as a conversion on my brokerage statement, is there anyway to reverse this?

If not, do I report the non deductible $7,000 IRA contribution when I file my 2021 taxes and figure my basis to include the 401 K roll over from 2021? 

I  think I report the Roth conversion on my 2022 taxes when I recive the 10099R, is that correct? 

Thanks

 

Thanks

0 1 382
1 Best answer
Expert Alumni
Feb 15, 2022 9:58:56 AM

Yes, the conversion is reported on your 2022 tax return since it happened in 2022.

 

To confirm, the $7,000 was a traditional IRA contribution for 2021. Please be aware, if you do not have earned income in 2022 then you cannot make contributions to an IRA.

 

You might want to double-check why your financial institute didn't record your contribution correctly.

 

 

To enter the nondeductible contribution to the traditional IRA on your 2021 tax return:

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions”
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
  6. Enter the amount you contributed
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contributions before this tax year.
  9. If you had a basis in the Traditional IRA before then enter the amount.
  10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a screen saying $0 is deductible).

 

You will enter the 401k rollover on your 2021 tax return. Answer all follow-up questions carefully.

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “1099-R”
  3. Click on “Jump to 1099-R” and enter your 1099-R

 

 

 

Next year on your 2022 tax return TurboTax will ask you about your basis and the value of all traditional IRA accounts to calculate how much of the conversion is taxable:

 

  1. Click on "Search" on the top right and type “1099-R”
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
  5. On the "Your 1099-R Entries" screen click "continue"
  6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
  7. Answer the questions about the basis and value

 

 

 

 

 

 

1 Replies
Expert Alumni
Feb 15, 2022 9:58:56 AM

Yes, the conversion is reported on your 2022 tax return since it happened in 2022.

 

To confirm, the $7,000 was a traditional IRA contribution for 2021. Please be aware, if you do not have earned income in 2022 then you cannot make contributions to an IRA.

 

You might want to double-check why your financial institute didn't record your contribution correctly.

 

 

To enter the nondeductible contribution to the traditional IRA on your 2021 tax return:

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “IRA contributions”
  3. Click on “Jump to IRA contributions"
  4. Select “traditional IRA”
  5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
  6. Enter the amount you contributed
  7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
  8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contributions before this tax year.
  9. If you had a basis in the Traditional IRA before then enter the amount.
  10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a screen saying $0 is deductible).

 

You will enter the 401k rollover on your 2021 tax return. Answer all follow-up questions carefully.

 

  1. Login to your TurboTax Account 
  2. Click on "Search" on the top right and type “1099-R”
  3. Click on “Jump to 1099-R” and enter your 1099-R

 

 

 

Next year on your 2022 tax return TurboTax will ask you about your basis and the value of all traditional IRA accounts to calculate how much of the conversion is taxable:

 

  1. Click on "Search" on the top right and type “1099-R”
  2. Click on “Jump to 1099-R”
  3. Click "Continue" and enter the information from your 1099-R
  4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
  5. On the "Your 1099-R Entries" screen click "continue"
  6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
  7. Answer the questions about the basis and value