1099-r box 7 code g

[rickboston]

I converted a traditional IRA to Roth IRA last year. I received a 1099-r showing the amounts as fully taxable in boxes 1 and 2a. Box 7 shows code G with a Y in the box IRA/SEP/SIMPLE. Turbotax is telling me this is wrong and it should not be B. I contacted the company that said is is correct. When I keep going through it does not appear to be a taxable event in Turbotax.

How should I enter this?

Thanks in advance

[DaveF1006]

Whenever you convert a Traditional IRA to a Roth, it is a taxable event because you are converting pre tax dollars into after tax dollars. When entered as a rollover code G, it will not trigger this as a taxable event.

A more appropriate code would be a code 2, which will make this distribution taxable. I would change this on the form and if questioned by the IRS, you can state that your Administrator for the 1099R miscoded Box 7 and that they refused to reissue the 1099R.

[rickboston]

Thanks for the quick response. I will change it to code 7 as I am over 59-1/2.

Thanks again.

[dmertz]

A Form 1099-R with code G in box 7 and the IRA/SEP/SIMPLE box marked reports a distribution from a traditional IRA that was directly rolled over to a traditional account in an employer plan, not anything to do with a Roth account.  A Form 1099-R with code G in box 7 and the IRA/SEP/SIMPLE box marked can never have a nonzero taxable amount in box 2a, so it seems clear that the preparer prepared this form incorrectly.  I suggest escalating this with the financial institution.

You are not permitted to simply change the code in box 7.  If the form is incorrect and the preparer will not make the correction, you must file a substitute Form 1099-R (Form 4852) and provide explanation.  Doing so will prevent you from e-filing.

[lcg54]

I also converted from a traditional to a Roth IRA, and my financial institution also incorrectly put G in box 7.  I changed the code in turbotax to 7 (since I am over 59-1/2).  When I did that, Turbotax treated the money as taxable for federal, which is correct, but it also treated it as taxable for Pennsylvania, which is NOT correct: the amount converted is NOT taxable in Pennsylvania.  I tried putting in a code 2, and then Turbotax treated everything correctly: taxable for federal, not taxable for Pennsylvania.  But code 2 is for people under 59-1/2, which I'm not.  Turbotax should have the same Pennsylvania treatment for code 2 as it has for code 7, but it doesn't.  How do I convince Turbotax that this conversion is not taxable in PA?

[MarilynG1]

Enter your 1099-R exactly as issued.  The IRS has a copy.

The Code G indicates a non-taxable rollover, so that is correct if you converted to an IRA.  In the follow-up questions after you enter your 1099-R, you'll be able to indicate exactly what you did.  If you rolled over pre-tax IRA contributions to a Roth, you will be taxed on that.  Here's more info on How to Enter a Back-Door Roth Conversion and Box 7 Codes on Form 1099-R.

In the Pennsylvania interview, you will get a question for excluded retirement income reported from Federal, and you'll be able to exclude it there.

Here's more info on form 1099-R.

@lcg54 

[lcg54]

Thanks, MarilynG1, but the Pennsylvania interview did NOT give me any questions that allowed me to indicate that the distribution was taxable for federal but not taxable for PA.  The only way I was finally able to fix this was to go to the PA forms, drill down to the section where the 1099-R distribution was entered, and correct the PA basis to match the distribution amount.  Turbotax enters the PA basis correctly when I enter a code 2 for box seven on the 1099-R, but it leaves the PA basis blank when I enter a code 7.  I stand by my contention that this is a mistake, and that Turbotax should be treating code 2 and code 7 the same for PA tax purposes.