Where do I enter 403(b) rollover to traditional IRA; options in "1099-R Entries" are to Roth 401k, 403b, IRA only, not Traditional IRA

[cklos5567]

details were provided above, TurboTax does not seem to allow entries regarding rollover from 403b to "Traditional" IRA.  Where or how do I do this?

[dmertz · Accepted solution]

To report the rollover properly from this code G Form 1099-R, TurboTax only needs to know that the rollover was not to any type of Roth account.  There is no need to explicitly indicate that it went to a traditional IRA.

[magarian]

Why does code G distribution on 1099-R from 403b to IRA cause AGI to increase?  This increases AGI above deductible limits ($118k) for IRA Contribution for 2016.

[dmertz]

AGI should only increase if the direct rollover is to a Roth account, indicated by a nonzero amount in box 2a of the Form 1099-R.

Box 2a should not be blank.  If box 2a is blank and box 2b Taxable amount not determined is not marked, enter a zero in box 2a.

[magarian]

Box 2a is blank and 2B Taxable Amount is blank and 2b Total Distribution has an X.

[magarian]

Thanks for prompt reply.  Rdm

[magarian]

So why does MAGI increase with this 403b rollover to an IRA?

[magarian]

Shouldn't MAGI also be reduced by rolling moneys into the IRA?

[dmertz]

This rollover does not increase MAGI.  Enter a zero in box 2a of TurboTax's 1099-R form.

[magarian]

On Fed Tax Summary, "Your Total Income" still includes the 403b distribution.

[VolvoGirl]

The Review and Summary screens add everything as income.  You have to check the actual 1040 for the taxable amount.  It should say ROLLOVER by line 16b

To preview your Online return, go to My Account at the top.  Then Tools, then View Tax summary.  Then you can click on Preview My 1040 at the top. OR click Review near the top of your screen, and then click Summary right below it.  Then Near the bottom of the We Guarantee Your Maximum Refund screen, click the Preview Return link.

[magarian]

dmertz and VolvoGirl thanks for the clarifications.   I guess we need to make contributions to Roth IRA instead of IRA.  It will simplify (eliminate) Non-deductible contributions issue with IRA.  Thanks again.

[dmertz]

By that I assume that you mean that you have found that your MAGI for making a deductible traditional IRA contribution is too high, but your MAGI for making a Roth IRA contribution is not too high.

[magarian]

Yup.  So is it possible to do a conversion of the IRA 2016 contribution into a Roth IRA now? in 2017? or does it have to be done in 2016?

[dmertz]

You can convert to Roth whenever you want.  The conversion is taxable income in whatever year the conversion is performed.  A conversion now would therefore be reportable on your 2017 tax return.  With a potentially significant amount having been rolled over to an IRA from the 401(k), the conversion may be largely taxable, including only a small portion of your basis in nondeductible contributions.  If you are eligible to make a Roth IRA contribution, you would likely be better off do that than making a nondeductible traditional IRA contribution and later converting to Roth.