topic After-Tax 401(k) Rolled to Traditional IRA then Converted to Roth in Retirement tax questions

After-Tax 401(k) Rolled to Traditional IRA then Converted to Roth

Zeke15 — Sun, 26 Jan 2025 02:53:49 GMT

In 2024 I rolled over after-tax amounts to my Traditional IRA (instead of my Roth IRA). After rolling the amounts over to my Traditional IRA, I converted the amounts to my Roth IRA. The 1099-R that reports the conversion of Traditional IRA amounts to the Roth IRA includes the after-tax amounts in the gross distribution (box 1) and the taxable amount (box 2a), but also indicates that the taxable amount is not determined (I also converted other amounts from my Traditional IRA, including a backdoor IRA/Roth conversion).

Unfortunately, when TT computes my basis of my Traditional IRA 1099-R, it is not including the after-tax amounts from my 401(k) plan, but only my non-deductible IRA Contributions. How do I increase the basis of my Traditional IRA 1099-R to include the after tax amounts from my 401(k) plan?

Any thoughts would be greatly appreciated. As of now, I included a negative number as "Other Reportable Income" but that should not be the correct way to increase basis here.

Re: After-Tax 401(k) Rolled to Traditional IRA then Converted to Roth

dmertz — Sun, 26 Jan 2025 04:26:59 GMT

You must click the Continue button on the page that lists the Forms 1099-R that you have entered, indicate that you made nondeductible traditional IRA contributions, click the EasyGuide button when it is presented, then make a box that you rolled over after-tax money from an employer plan (even though it might be asking for such amounts for a previous year) , then indicate the after-tax amount that rolled over to your traditional IRA and provide explanation. TurboTax will include this amount on Form 8606 line 2 as an adjustment to your basis.

Re: After-Tax 401(k) Rolled to Traditional IRA then Converted to Roth

Zeke15 — Sun, 26 Jan 2025 10:27:08 GMT

Thanks. I really appreciate it.

Re: After-Tax 401(k) Rolled to Traditional IRA then Converted to Roth

DavidD66 — Mon, 03 Feb 2025 23:52:36 GMT

That is correct. Otherwise your basis in the IRA will be understated and result in your paying more tax. The transaction you are reporting is not a routine one, and is not fully accounted for by the program's questions.