Converting 401K After Tax Contributions to Roth IRA How Handled in Turbotax

[kms369]

I had a company 401K that I contributed to for about 20 years, and some of the early contributions to that 401k were ‘after tax’.  Post retirement, in 2024, I withdrew the ‘after tax’ $ (say that was $10k) and converted them to a Roth IRA.  I was also required to withdraw the earnings from those ‘after tax’ $ (say that was $40k) and those were rolled over to a rollover IRA.   The Form 1099-R shows:

Box 1 (Gross Contribution) of $50k
Box 2a (Taxable amount) and 2b are blank
Box 5 (Employee contrib/desig Roth contrib or insurance premiums) showing $10k and
Box 7 (code) shows G-Direct rollover and rollover contribution.       

In Turbotax,  it asks:

Is this 1099-R reporting a rollover of funds from a 401(k), 403(b) or governmental 457(b) plan to a designated Roth 401(k) or Roth 403(b) plan?

The available answers are Yes and No.   However, in my case, some of the money went to a Roth 401(k) and some went to a Rollover IRA, so how do I answer that question (it’s not a Yes or No question for me)?

One further question related to this, in the Turbotax ‘Picture of Your 2024 Income’, that $50k shows as a line item and drives up my 2024 Total Income by $50k (even though I don’t get taxed on it).  Turbotax never did ask me about where that other $40k went (ie that it went into a Rollover IRA).  Shouldn’t Turbotax ask me whether the $40k went into a rollover IRA? 

Your input on this is greatly appreciated. 

[DanaB27 · Accepted solution]

You will have to split Form 1099-R into two separate Forms for TurboTax to handle this situation. One for the rollover to the traditional IRA and one for the conversion to the Roth IRA. As long as the total and distributions codes match entering it like this will not cause a problem.

1. Click on "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Enter the first 1099-R for the rollover into the traditional IRA:
   1. Box 1 Enter amount send to traditional IRA
   2. Box 5 blank
4. On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
5. On the "Did you move the money to a Roth IRA?" screen answer "No"
6. Enter a second 1099-R for the conversion to Roth IRA:
   1. Box 1 Enter amount send to Roth IRA
   2. Box 5 enter amount listed on Form 1099-R
7. On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
8. On the "Did you move the money to a Roth IRA?" screen answer "Yes"

[kms369]

Great, thanks for the prompt response.   We followed your instructions and it makes sense that we've correctly addressed the split in Turbotax.   The 'Picture of Your 2024 Income' still shows that Roth/Rollover money as part of our total income, but we confirmed that when we did a rollover in a previous year, it also showed the rollover $ as part of our total income for that year (and we weren't charged income tax on it), so all is good.  Thanks for your detailed response!