Hi
My father in law (70+) did a rollover of 20K RMD into a Roth IRA in 2020.
I assume he has to pay taxes based on current income and that is fine, but TurboTax is saying that contribution to the Roth IRA was too high ( above 7K and subject to 6% tax penalty. This does not seem right. Please advise.
Thanks
DKD
Please do not enter this as a Roth IRA contribution in the IRA contribution section under Deductions & Credits.
Generally, you cannot convert an RMD into a Roth IRA but RMDs were waived in 2020. You must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and reenter the 1099-R form. Please follow the steps below to report the conversion.
For TurboTax Desktop:
For TurboTax Online:
Yes, you can convert a 401k to a Roth IRA. But the Required Minimum Distributions (RMD) cannot be converted or rolled over (IRS). Only if you take out more than the RMD then the additional amount may be converted.
Please do not enter this as a Roth IRA contribution in the IRA contribution section under Deductions & Credits.
Generally, you cannot convert an RMD into a Roth IRA but RMDs were waived in 2020. You must indicate to TurboTax that none of the distribution was RMD. If you already enter the 1099-R as RMD and changing your answer to the RMD question doesn't work then you have to delete and reenter the 1099-R form. Please follow the steps below to report the conversion.
For TurboTax Desktop:
For TurboTax Online:
Thank you it fixed the issue.
Now for next year, can he do the same ?
I was referring to this link which advises that it is ok to rollover a trad 401k to a Roth IRA.
Thanks
DKD
Yes, you can convert a 401k to a Roth IRA. But the Required Minimum Distributions (RMD) cannot be converted or rolled over (IRS). Only if you take out more than the RMD then the additional amount may be converted.