1099R and 5498 - 401K Rollover to Rollover IRA and to Roth IRA

[syoung123]

Hello - I roll overed my entire 401K to a Rollover Traditional IRA account, and then converted portion of the money in the rollover traditional IRA to a Roth IRA.  For example,

401K to rollover traditional IRA – 

1099R (from the 401K custodian) - $100,000 on box 1 "gross distribution", $0 on box 2a "taxable amount", "total distribution" box "checked" on box 2b, "distribution code" - "G" on box 7, “IRA/SEP/Simple” box "not checked".

Form 5498 (from rollover traditional IRA recipient) - line 2 "rollover contributions" amount of $100,200 (the amount on this line is $200 more than the $100,000 shown on the 1099R.  Per the custodian, this was because some of the 401K rollover funds were in the form of stocks, and they incurred $200 dividends between the 401K distribution and the actual receipt into the rollover traditional IRA account).

Rollover Traditional IRA conversion to Roth IRA (partial conversion) -

1099R (from rollover traditional IRA custodian) - $50,000 on box 1 "gross distribution" and box 2a "taxable amount", "taxable amount not determined" box "checked" on box 2b, $8,000 on box 4 "federal income tax withheld", "distribution code" - "7" on box 7, "IRA/SEP/Simple" box "checked".

Form 5498 (from Roth IRA recipient) - line 3 "Roth IRA conversion amount" - $42,000 ($50,000 distribution from rollover traditional IRA minus $8,000 federal income tax withheld)

My questions are (using TurboTax Premier desktop Windows version):

1.  In the "Retirement Plans and Social Security" section, "IRA, 401K, Pension Plan Withdrawals (1099R)" - I inputted the two 1099Rs (one for the entire distribution from 401K to the rollover traditional IRA, and one for the conversion of partial money in the rollover traditional IRA to Roth IRA).  What do I do with the two 5498 forms?  Are they just for my records and no input is needed?

2.  For the 401K distribution of $100,000 shown on the first 1099R and the rollover traditional IRA of $100,200 shown on the first 5498, what do I do with the $200 difference that was due to the extra dividend?  Do I need to account for or report the $200 difference between the distribution shown on the 1099R and the receipt shown on the 5498?

3.  Did I enter the input correctly?  When I inputted the 1099R that shows the conversion of some of the money in the rollover traditional IRA to the Roth IRA ($50,000 from the rollover traditional IRA with $8,000 federal income tax withheld) to TurboTax - the following screens show:

-  "where is the distribution from" - I checked "current year conversion from traditional IRA to Roth IRA" (the amount boxes were already filled in from the previous screen input of the 1099R)

- " Did I inherit the IRA?" - I checked "No"

- "What did you do with the money....?" - I checked "I moved the money to another retirement account....", and the following additional input lines popped up:

-  I checked "I did a combination of rollover, converting, or cashing out the money", and the next section popped up asking "tell us how much of the $50,000 moved to an IRA, 401K, or other retirement account"

-  I entered "$42,000" ($50,000 minus $8,000 income tax, the $42,000 is the amount shown on line 3 of the second 5498 form, and there is nowhere in TurboTax to input the 5498 form) in the box that says "amount converted to a Roth IRA account" (I left the other box that says "amount roll overed to another retirement account" blank)

-  TurboTax generated form 8606 "Nondeductible IRAs" that on "Part II" line 16 and 18 shows $42,000.  Is this correct?  Are there any other areas/lines that show this amount?

-  On 1040, line 4a and 4b shows the $50,000 distribution of rollover IRA to Roth IRA (fully taxable?), line 5a shows the $100,000 of 401K distribution to the rollover traditional IRA, and line 5b shows $0 as non-taxable event with a printed notation of "ROLLOVER" above the "5b Taxable amount" line.  Is this correct?

Thank you.

[MarilynG1]

1. Yes, the Form 5498 is for your records only. 

2. No, you don't need to account for the difference in the amount on your 1099-R and Form 5498.  Form 5498 tells you the fair market value of all the investments in your IRA account.

3. Yes, you entered correctly.  Basically, the 50K you rolled over to your Roth IRA is taxable; however, you already paid tax on it (which you reported).  Your Form 8606 is correct. 

Click this link for more discussion on Reporting Rollover with Tax Withheld. 

Here's more info on Form 5498,  Traditional to Roth Conversions and Form 8606 you may find helpful. 

[BJB11]

Thanks for the information. I'm using Turbo Tax Premiere.  My question is similar but not the same. 

1099R and 5498 

I had a 401K with both taxable and nontaxable money since I'd contributed after-tax (not taxable) money and  earnings from those contributions (taxable).  I converted the 401K into two IRA's: the non taxable funds to Roth IRA (after tax contribution in 401K) and  taxable to Rollover IRA (pretax earnings on my after tax contribution.) 

The 1099-R had the following boxes:

Box 1, "Gross distribution"   combined  taxable and non-taxable amounts,  ~$120k,

Box 5, "Employee contrib/des Roth contrib or insurance premium" showed nontaxable, after tax, ~$40K,

Box 7, "Distibution code" is marked "G".

The after tax to Roth amount is showing up in 8606 correctly, I think.

However, the conversion to Rollover /Traditional IRA , ~$80K, is included as Taxable income on 1040 Line 5b.  Since this is a Rollover /Traditional IRA, it should not be taxed at this time.

The problem may be that I entered the taxable conversion amount from Form 5498, ~$80K.  If that is the problem,  how can I correct it?    I've attempted, without success, to get back to that point in Turbo Tax where I made the entry.

The Search (upper right hand of screen) on my Turbo Tax does not respond to anything typed,  so would appreciate a step-by-step procedure. 

Thank you..

[DanaB27]

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. 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 2b check
   3. 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 2b check
   3. 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"

You shouldn't have an entry on Form 8606 for this transaction since this was from a 401(k). The original post had a conversion from a traditional IRA to Roth IRA.

@BJB11