Hello,
I'm getting wrong numbers (double taxing my after-tax non-roth contributions) from Turbotax after inputting megabackdoor roth IRA and Roth IRA conversion/rollover of an employer sponsored pretax retirement plan, so I'm posting here for your help.
I was an employee of the University of California system that sponsors defined contribution plan (DCP), similar to 401K. It has a mandatory monthly pre-tax contribution component and voluntary after-tax non-roth contribution that can be rolled over monthly to Roth IRA (aka Mega Backdoor Roth IRA). I switched job in the middle of year 2020, which allowed me to rollover the pre-tax component of the DCP into Roth IRA (in addition to my monthly mega backdoor roth IRA).
To summarize, DCP account has the following components for tax purposes:
1. Pre-tax Contributions + associated earnings (which was rolled over to roth IRA at the end of employment - taxable)
2. After-tax non-roth contributions (which got converted to roth IRA every month - should not be taxed)
3. Earnings on After-tax non-roth contribution (taxable and rolled over to roth IRA)
I got my 1099-R form from Fidelity and here it is.
1. Gross distribution $12,106.56
2a. Taxable amount: $6,028.31
2b. Total distribution checked
5. Employee contrib/desig Roth contrib or insurance premiums: $6000 (this was the amount of after-tax non-roth contribution that I made before its associated earnings)
7. Distribution code: G
When I plug these numbers in to Turbotax, the 1040 form shows:
5a Pensions and annuities: $12,107
5b Taxable amount: $12,135
which is likely incorrect because it seems to count the $6000 non-roth after tax contribution as taxable amount.
This was how I plugged my information into turbotax:
-On the form 1099-R you received, is the IRA/SEP/SIMPLE box between box 7 and box 8 checked? ans: no the box is blank
-Is this 1099-R reporting a rollover of funds from a 401k plan to a designated roth 401K? ans: No, this money didn't roll over to a designated roth 401k
-For rollovers to a Roth IRA, we may need to collect additional info. For rollovers to all other types of retirement account (such as traditional IRA), just answer No. ans: Yes, this money was rolled over to a Roth IRA account
-Did you make any after-tax contributions to your 401k plan? This would be contributions you made into the plan yourself, rather than being made by your company on your behalf. ans: yes, I made after-tax contributions to this 401k.
-After tax contributions to 401K: ans: $6,000.00
-Was this pension received from employment as public safety officer? ans: No
What am I doing wrong? How do I make it so that I don't get double taxed on my after-tax contribution of 6000?
Thanks for your help.
