topic Re: Roth transfer in Get your taxes done using TurboTax

Roth transfer

FLfiler21 — Wed, 21 Apr 2021 20:09:24 GMT

How do I report a transfer from a Roth to a standard IRA. Is it done on form 8606 part 1 or in some other way?

Re: Roth transfer

macuser_22 — Wed, 21 Apr 2021 20:18:56 GMT

@FLfiler21 wrote:

How do I report a transfer from a Roth to a standard IRA. Is it done on form 8606 part 1 or in some other way?

Explain what you mean. You cannot "transfer" money form a Roth to a Traditional IRA. You can recharacterize Roth contributions to be treated as Traditional IRA contributions if done before the due date of the tax return for the year that the contributions was for.

Re: Roth transfer

FLfiler21 — Wed, 21 Apr 2021 22:27:20 GMT

I had a distribution from an IRA. I then had a distribution from my Roth which I deposited into the IRA with the goal to minimize the taxes due from the original IRA distribution. Turbo tax recognizes the original IRA distribution but doesn’t recognize the money added back to the IRA which came from the Roth distribution.

Re: Roth transfer

fanfare — Thu, 22 Apr 2021 03:50:17 GMT

"I deposited into the IRA with the goal to minimize the taxes"

This can work only if you are eligible for a deductible IRA contribution,

and you had wages of at least the amount you are contributing.

It doesn't matter that you took Roth money to do it.

Re: Roth transfer

FLfiler21 — Thu, 22 Apr 2021 13:29:14 GMT

Is that true even if you put the money back into the IRA within 60 days if the first distribution from the IRA?

Is this then a "nondeductible contribution to an IRA" reportable on part 1 of form 8606?

Re: Roth transfer

fanfare — Thu, 22 Apr 2021 13:39:41 GMT

That's different.

If you return the money within 60 days, you can put back the entire amount, including any tax that was withheld.

That's a Rollover, not a contribution.

The net result is as if nothing happened, but it will show on your Form 1040.

Except in your case, your Roth net value is lower.

You must answer the TurboTax questions correctly.

Re: Roth transfer

FLfiler21 — Fri, 23 Apr 2021 21:16:20 GMT

From what I read, a rollover is only when a transfer is to the same type of IRA, so a transfer from a Roth to a standard IRA would not be a rollover. It seems like my Roth distribution is simply that - a distribution.

In my case, I first took a distribution from my standard IRA. Then within 60 days I put some of that money back into the standard IRA . The fact that the money I put back into the standard IRA came from a Roth distribution maybe be irrelevant. Then the question is how do I report the money being deposited back into the standard IRA and how does that affect my taxes.

Re: Roth transfer

DanaB27 — Sun, 25 Apr 2021 13:29:44 GMT

Please follow these steps to report the rollover:

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Click "Continue" and enter the information from your 1099-R
Continue "What did you do with this money from this payer?" and select "I moved the money to another retirement account (or returned it to the same account)"
Choose “I did a combination of rolling over, converting, or sashing out money" and enter the amount next to "Amount rolled over to another (or back into the same) retirement account"

@FLfiler21

Re: Roth transfer

Critter-3 — Sun, 25 Apr 2021 14:06:13 GMT

The effect of calling what you put back into the traditional IRA within the 60 day window is the same as if you'd made a traditional IRA contribution for an adjustment to your tax return. Both actions have the exact same effect to your bottom line of the tax return. In your case entering in that you made a rollover within the 60-day time frame is the correct thing to do. You will not enter a new contribution to the IRA. No form 8606 is required. Now if you had made a contribution as well as the rollover then you would enter both transactions in the program. Traditional IRA deductible contributions can only be made if you have eligible earned income on the tax return. Rollovers do not have this eligibility restriction.

Re: Roth transfer

FLfiler21 — Sun, 25 Apr 2021 16:23:49 GMT

I have entered that the money reported in the Roth 1099-R was all rolled over and I put in the amount. However, that doesn't change the total taxable amount on 1040 line 4b or my total taxes due. Nor does it change anything on the turbotax easy entry 1099-r data sheet.

Oddly to me, I'm never asked which IRA it was placed back into. There are two standard IRA accounts in addition to the Roth.

I am not being taxed on the Roth distribution since that amount of money is not included on 1040 line 4b, only on line 4a. Could my problem be that the brokerage company should have only reported my net distribution on the 1099 they sent , i.e. the initial distribution minus the amount put back within the 60 days? The 1099-R they prepared only shows the initial distribution.

Re: Roth transfer

macuser_22 — Sun, 25 Apr 2021 16:35:19 GMT

@FLfiler21 wrote:

I have entered that the money reported in the Roth 1099-R was all rolled over and I put in the amount. However, that doesn't change the total taxable amount on 1040 line 4b or my total taxes due. Nor does it change anything on the turbotax easy entry 1099-r data sheet.

Oddly to me, I'm never asked which IRA it was placed back into. There are two standard IRA accounts in addition to the Roth.

I am not being taxed on the Roth distribution since that amount of money is not included on 1040 line 4b, only on line 4a. Could my problem be that the brokerage company should have only reported my net distribution on the 1099 they sent , i.e. the initial distribution minus the amount put back within the 60 days? The 1099-R they prepared only shows the initial distribution.

You cannot roll a Roth distribution into a Traditional IRA - that is not permitted. That is neither a rollover or a conversion - it is a distribution from the Roth IRA and a new contribution to the Traditional IRA subject to the contribution limits and cannot exceed your taxable compensation (W-2 wages or net self-employed income.) or it will be an excess contribution subject to penalty.

Roth IRA distributions that do not exceed your own prior Roth contributions are not taxable.

Re: Roth transfer

DanaB27 — Sun, 25 Apr 2021 16:37:19 GMT

To clarify, you received a 1099-R for the distribution from the traditional IRA (what you call standard IRA) and a 1099-R for the distribution from the Roth IRA, correct? And you put money back into the traditional IRA within 60 days after you took the distribution from the traditional IRA, correct?

If yes, then you will only answer the questions about the rollover for the 1099-R from the distribution of the traditional IRA. For the Roth distribution you will answer you cashed it/ did something else.

@FLfiler21

Re: Roth transfer

macuser_22 — Sun, 25 Apr 2021 17:01:14 GMT

@FLfiler21 wrote:

Oddly to me, I'm never asked which IRA it was placed back into. There are two standard IRA accounts in addition to the Roth.

That is because you only have one Traditional IRA that can be broken into any number of accounts, but for tax purposed that are all the same IRA.

Traditional IRA's are "before-tax" accounts meaning that you pay the tax when you take the money out. Roth IRA' are "after-tax" accounts meaning you pay the tax before you put the money into the Roth.

You can convert a Traditional (before tax) IRA to a Roth (after-tax) by paying the tax on the money. You cannot go the other way around because it is not possible to put after-tax money into a before-tax account. Tax law does not permit that.