1099 R

2 replies
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need help on filling out tax form on this 1099-R, conversion of nondeductible standard ira contribution to Roth ira.

ErnieS0

Alumni - Intuit

Follow the steps for How do I enter a backdoor Roth IRA conversion? A backdoor Roth IRA conversion is converting an IRA with a nondeductible (after-tax) basis into a Roth.

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Hal_Al

Level 15

Be aware, this year's contribution cannot be converted in isolation from any existing traditional (including rollover) IRA(s). It's best explained by example. Let's say you have a $95,000 balance in all your existing traditional IRAs and that balance consist of $45,000 in deductible contributions, $10,000 in previous non-deductible contributions and $40,000 in earnings (interest, dividends & capital gains). This year you make a $5000 non-deductible contribution and convert $5000 to a Roth. Only 15% of the $5000 conversion ($750) will be tax free. Your basis, in all your IRAs, is $15,000 (the previous $10,000 of non-deductible contributions plus this year's $5000 contribution). TurboTax will divide that $15,000 basis by the $100,000 balance ($95K+5K) to arrive at the 15% tax free ratio. This is the way the IRS requires it to be done. The calculations will be shown on form 8606.