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Level 1
posted Jun 5, 2019 11:51:28 PM

Why do I owe a penalty for Excess contribution to Roth IRA when it was aconversion from a Traditional IRA to a Roth IRA?

My 2018 distribution from a traditional IRA covered my RMD plus an additional amount for conversion to my Roth IRA.  Turbo Tax concluded that the entire Roth "contribution' amount was excessive and subject to a penalty.

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1 Best answer
Level 15
Jun 5, 2019 11:51:30 PM

It seems that you mistakenly entered the conversion under Deductions & Credits as a new regular contribution.  Go back and remove it from there.  The conversion is to be reported only by entering the code 7 Form 1099-R, indicating the amount that was RMD, then indicating the amount converted to Roth.  Only the amount in excess of your RMD is permitted to have been converted to Roth.

2 Replies
Level 15
Jun 5, 2019 11:51:30 PM

It seems that you mistakenly entered the conversion under Deductions & Credits as a new regular contribution.  Go back and remove it from there.  The conversion is to be reported only by entering the code 7 Form 1099-R, indicating the amount that was RMD, then indicating the amount converted to Roth.  Only the amount in excess of your RMD is permitted to have been converted to Roth.

Level 1
Jun 5, 2019 11:51:32 PM

The response provided me with a proper solution.  I had entered my conversion data under the Wages & Income section and later also enter the same data under the Deductions & Credits section.  Removing it from the Deductions & Credits section solved the problem.  THANKS!