Complicated IRA Re-characterization and Conversion spanning 2018 and 2019

happy_sam — Sun, 02 Feb 2020 21:38:41 GMT

I seemed to have stumped TurboTax's live-help support; I wonder if the community can help. Here's the story:

1. In 2019, I realized that I couldn't contribute to Roth IRA in 2018 because of the MAGI limit, but I did make contributions in the amount of $X1 for 2018. And so, I re-characterized $X1 in 2019 to Traditional IRA. By then the value had grown to $X2. And afterwards, I converted $X2 to Roth IRA. I believe this is a backdoor Roth IRA conversion, and please note the years.

2. In 2019, I contributed to non-deductible Traditional IRA for 2019 in the amount of $Y1. It grew to $Y2. And afterwards, I converted $Y2 to Roth IRA.

3. In 2019, again I contributed to non-deductible Traditional IRA for 2019 in the amount of $Z1. It grew to $Z2. And then, I converted $Z2 to Roth IRA.

For all of the above, I got three 1099-R forms from Fidelity (all of the above were done in Fidelity):

1. First 1099-R is for $X2 with box 2a of blank and box 7 code of "R".

2. Second 1099-R is for $Y2 with box 2a of blank and box 7 code of "R".

3. Third 1099-R is for an amount of $U2, where $U2 = $X2 + $Y2 + $Z2. This time box 2a says $U2 and box 7 code of "2".

I already entered all three 1099-Rs into Turbotax, but the third 1099-R causes the amount of taxes due to shoot up. I don't think I should owe any taxes given that all contributions were after taxes. Here's my question: I was able to figure out how to make TurboTax recognize that $Y1 and $Z1 were converted into Roth IRA (see https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-a-backdoor-roth-ira-conversion/00/25567). But what how do I report $X1's re-characterization and the subsequent conversion? Again $X1 was a contribution in 2018, but was re-characterized and then converted in 2019.

Many thanks!

Re: Complicated IRA Re-characterization and Conversion spanning 2018 and 2019

fanfare — Sun, 02 Feb 2020 22:33:36 GMT

x1 is your prior years basis, this goes on your 8606 line 2.

that will fix your problem.

others will tell you to file a 2018 8606 alone, separately.

topic Complicated IRA Re-characterization and Conversion spanning 2018 and 2019 in Retirement tax questions

Complicated IRA Re-characterization and Conversion spanning 2018 and 2019

Re: Complicated IRA Re-characterization and Conversion spanning 2018 and 2019