1099-R Forms when doing Backdoor Roth

user2424123 — Thu, 11 Mar 2021 23:14:11 GMT

I received two 1099-R forms after attempting the Backdoor Roth process, and I wanted to verify everything is as expected.

1099R with distribution code G - I had X dollars in a traditional IRA and did a rollover such that there is $0 left in that account at the end of the year.
- It says gross distribution of X dollars, with $0 taxable amount, and "Total distribution" is marked.
1099R with code 2 - I had contributed $6k (nondeductible) to a traditional IRA (same account as part 1) and converted $6k to a Roth IRA by end of year.
- It says gross distribution and taxable amount are $6k.
- "Taxable amount not determined" and "Total distribution" are both marked

My questions are mainly for the second form:

- Is the Distribution Code "2" expected in this case?

- Should the taxable amount be $6k? Does this mean I will need to pay taxes again on this post-tax money?

- The events that generated forms 1) and 2) did not happen sequentially (the $6k contribution was mixed in with the rest, but exactly $6k was converted). I believe that doesn't matter since it all happened by the year's end - is that correct?

Re: 1099-R Forms when doing Backdoor Roth

SamS1 — Fri, 12 Mar 2021 00:06:27 GMT

You should be able to do the conversion. The code 2 indicates the distribution was an early withdrawal and an exception to the 10% penalty applies. Normally on a Backdoor Roth, you would make a contribution to a traditional IRA that would be nondeductible due to income limits. Next you would input the 1099R indicating it was Roth conversion and TurboTax would handle the rest with your $6000 1099R amount not taxable. Yes, normally the 1099R for the conversion amount would indicate the the box 1 gross distribution and box 2a taxable amount with $6000 with code 1 in box 7. Yes, the conversion needed to be done by 12/31 in the year it occurred. I am not sure what your other 1099R with the G code represents and if it is part of the conversion transaction.

In TurboTax, you will want to enter the contribution to the Traditional IRA first then enter the 1099R. When finish, this should result in your traditional distribution being non-taxable. Click here for more information. A backdoor Roth IRA allows you to get around income limits by converting a Traditional IRA into a Roth IRA. Contributing directly to a Roth IRA is restricted if your income is beyond certain limits, but there are no income limits for Roth conversions.

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1099-R Forms when doing Backdoor Roth

Re: 1099-R Forms when doing Backdoor Roth