If I sold stock from my espp and rolled it into a roth ira, do I pay taxes? How do I list this on my taxes... So far, I just listed it as an 1099, how do I show the roth ira for the same amount i sold my stock?

[TomYoung · Accepted solution]

I am not sure where you are at in this transaction.  Based on what you've said here I take it that you sold stock acquired via an ESPP and then put that money in a Roth IRA.  I'm assuming that no 1099-R's - which report withdrawals from IRA's has been issued.

An ESPP is not a retirement account so the sale of the stock, reported to you on a 1099-B, does create taxable income.  The compensation associated with the sale might be reported to you on your W-2 - it depends on whether the sale was Qualifying or Non-Qualifying - so be sure to use the correct basis, which is your out of pocket costs plus the compensation.  Otherwise you'll be double taxed.

At that point the money is "after tax" money and contributing that to the Roth IRA is not a taxable event.

Contributions to Roth IRA's create "income" if the money is in a tax-deferred account, like an IRA or other retirement plan.

If I've misunderstood what went on here, if you sold the stock, deposited the proceeds in the Roth IRA, and have now taken a distribution reported to your on a 1099-R, then the issue isn't one of "rollover", the issue is that you can always take your original contributions out of a Roth IRA at any time.  The follow-up questions of the 1099-R interview will elicit this information.

Tom Young

[dmertz]

In the follow-up to entering the Form 1099-R exactly as received under Wages & Income -> Retirement Plans and Social Security -> IRA, 401(k), Pension Plan Withdrawals (1099-R), indicate that you moved the money to a Roth IRA.  You should see the amount appear on Form 1040 line 16b (or Form 1040A line 12b) and you should see the word ROLLOVER next to the line.

[bredefam]

Since this is the "Recommended Answer" is it true that Intuit is indicating that this process is acceptable by the IRS as compared to the method noted by Tom Young?

[dmertz]

This is a user-to-user forum and recommendations can be made by anyone, so they must be taken with a grain of salt.  A recommendation does not in any way indicate an endorsement of the answer by Intuit.

If the distribution was reported on a Form 1099-R and the distribution was from a qualified plan, it can be rolled over to an IRA or converted to a Roth IRA.  Sale of ESPP stock would be expected to be reported a Form 1099-B and TomYoung's answer would apply.   I'm going to recommend TomYoung's answer over mine since it seems to more directly addresses the circumstances posed in the original question.