Traditional IRA rollover and backdoor Roth conversion

Forum|Forum|4 years ago
March 12, 2022
6 replies
68 views

I did a rollover from my employer 401K to a traditional IRA and a backdoor Roth conversion in 2021. My responses to TT step-by-step questions don't capture either of these transactions. It may be that I'm not answering questions about "contributions" correctly, but the TT screen notes seem to imply that rollovers and backdoor Roth conversions are not contributions. I have 1099-R forms for both transactions. Any help with entering these transactions correctly in TT would be greatly appreciated. Thanks.

DanaB27

Employee Tax Expert

To confirm, you did a rollover from your 401k to your traditional IRA and then a conversion from this traditional IRA to your Roth IRA. Therefore, you have two Form 1099-R, correct?

Yes, do not enter these transactions as IRA contributions under Deductions & Credits. You will only enter your 1099-Rs and then answer all follow-up questions carefully.

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Enter your Form 1099-R for the 401k rollover
On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
On the "Did you move the money to a Roth IRA?" screen answer "No"
Continue through the questions until you can add your 2nd Form 1099-R for the conversion to Roth
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”
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
Answer the questions about the basis from line 14 of your 2020 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

Please be aware, if you only had pre-tax funds in the traditional IRA then this conversion will be taxable.

A backdoor Roth only works correctly if all traditional, SEP, and SIMPLE IRAs are empty before starting backdoor Roth. Then you can make nondeductible IRA contributions and it is best to convert the contribution right away to avoid earnings that would be taxable in a conversion.

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JMuldoonAuthor

Level 2

OK, I followed those steps and it did lead me to TT interview questions about rollovers and Roth conversions, so I think that solved the problem. One last question...after I do this and I check the 1040 form, I see the sum of the 2 1099-R's listed on Line 5a Pensions and Annuities and the Line 5b Taxable Amount is 0.0. Is that what I should expect to see?

DanaB27

Employee Tax Expert

It depends. To verify, you had a conversion from a traditional IRA to Roth IRA? If yes, then you would have the amount show up in line 4, please make sure that you check the IRA/SEP/SIMPLE box on your 1099-R.

If I misunderstood and both transactions came from your 401k then yes it would show in line 5 but it will have a taxable part for the conversion in 5b if it was converted from pre-tax funds.

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