Tax Year Prior to 2020: Backdoor Roth IRA contribution - 2 1099-R Forms Received

dad_123 — Mon, 22 May 2023 20:14:27 GMT

I have 2 1099-Rs for my traditional to Roth backdoor conversion

First 1099-R with distribution code 2 - make sense since I received distribution from traditional IRA (to convert to Roth)

Second 1099-R with distribution code N - this is the one that confuses me. Why did I get the form? I only received distribution once from traditional to convert to Roth, which is shown on the first form above.

Re: Backdoor Roth IRA contribution - 2 1099-R Forms Received

DanaB27 — Sat, 28 Mar 2020 19:37:10 GMT

Please follow the instructions below to enter the first 1099-R with code 2, please be sure to answer the basis question otherwise the conversion will be taxable:

Click "Federal" from the left side of your screen
Scroll down to “Retirement Plans and Social Security” and click “Show more”
Scroll down and click "Start" next to "IRA, 401(k), Pension Plan Withdrawals (1099-R)"
Answer "Yes" to the question "Did You Have Any of These Types of Income?"
Click "I'll Type it Myself"
Choose "Form 1099-R, Withdrawal of Money from 401(k) Retirement Plans, Pensions, IRAs, etc."
Click "Continue" and enter the information from your 1099-R
Answer questions until you get to “What Did You Do With The Money” and choose “I moved it to another retirement account”
Then choose “I converted all of this money to a Roth IRA account.”
On the "Your 1099-R Entries" screen click "continue"
Answer "yes" to "Any nondeductible Contributions to your IRA?"
Answer the questions about the basis

About the 2nd 1099-R with code N - Recharacterized IRA contribution made for 2019 and recharacterized in 2019. Did you recharacterize a contribution in 2019?

What's the difference between a conversion and a recharacterization?

Taxpayers can move all or part of their traditional IRA balance to a Roth IRA. These conversions are treated as a rollover, moving an amount from one retirement account to another, except a conversion to a Roth IRA has an impact on your taxes. Typically, most or all of the amount would be taxable. Be careful! There is almost always a time limit of 60 days to complete a conversion or rollover, with large penalties if the limit is not met.

Then again, taxpayers sometimes change their minds after making contributions to an IRA, or contributions or a conversion to a Roth IRA. Tax rules allow taxpayers to recharacterize their IRA contributions any time prior to the due date, including extensions, of their tax return. A recharacterization allows you to undo or reverse your rollover or contribution. With this in mind:

Think of IRA conversions as allowing you to transfer funds from a non-Roth IRA account into a Roth IRA account, often with a taxable impact.

Think of IRA recharacterizations as a set of special rules allowing you to change your mind about the type of your current year IRA contribution. As a result of the Tax Reform, beginning with 2018, recharacterizations of a Roth conversion is not allowed.

Re: Backdoor Roth IRA contribution - 2 1099-R Forms Received

dad_123 — Sun, 29 Mar 2020 21:44:20 GMT

Did more research and yes there was a recharacterization done from roth to traditional.

Re: Backdoor Roth IRA contribution - 2 1099-R Forms Received

VictorW9 — Sun, 29 Mar 2020 22:25:43 GMT

So, what it looks like basically, you are back to square one and the 1099-Rs balances off each other.

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Tax Year Prior to 2020: Backdoor Roth IRA contribution - 2 1099-R Forms Received

Re: Backdoor Roth IRA contribution - 2 1099-R Forms Received

Re: Backdoor Roth IRA contribution - 2 1099-R Forms Received

Re: Backdoor Roth IRA contribution - 2 1099-R Forms Received