401k Rollover + ROTH Conversion and Backdoor Roth

[bfiegoli]

Hello,

This feels a little bit complex, so will try to lay it out in a clean way. I have called TurboTax a few times with little help. Any help would be much appreciated. 

My wife and I have been making backdoor ROTH contributions for many years. We always do this in January and are very careful to get all out of the money out of the Traditional IRA as to not trigger any pro rata rules.

In 2020 my wife switched jobs and we decided it would be best to get everything converted to ROTH IRAs from her previous jobs.

We received 4 1099-R's. 

Mine - $6,000 Backdoor Roth with a Distribution Code of 2

Wife - Traditional 401k -> Traditional IRA - Distribution Code - G

Wife - Traditional 401k 2 -> Traditional IRA - Distribution Code - G

Wife - Traditional IRA -> ROTH IRA - Distribution Code -2

The Traditional IRA -> ROTH IRA 1099 includes the amount for both the Traditional IRA money from the 401k + the $6,000 for the backdoor ROTH. My understanding was that since at the end of the year there is still 0 dollars in the traditional account we have no Pro Rata Obligations. 

I am having trouble on Turbo Tax trying to tell them that the taxable amount from the 1099 should be $6,000 less than I am being taxed for. Their suggestion to me was to get fidelity to issue two 1099's with two different codes. Is this possible? Is there some other way to show this in Turbo? I also have the 5498 showing the $6,000 contribution this year. 

Any help would be greatly appreciated!

Brandon

[ThomasM125]

For the backdoor IRA you may need to report the non-deductible IRA contribution of $6,000 in addition to the form 1099-R reporting the withdrawal. TurboTax will do a calculation that will factor in your IRA basis (non-deductible contributions) available for the withdrawal. So, you need to make sure you answer the questions properly in the IRA contribution section as they will impact the treatment of the withdrawal as taxable or not. 

[bfiegoli]

Thanks for the response. Yes, this makes sense in practice, but the 1099 gives me the total amount moved from the Traditional IRA to the ROTH and does not discriminate between what was the rollover amount versus the backdoor $6,000. How would I break this up?

Thanks,

Brandon

[AmyC]

The program does. In the program, go to deductions and credits, scroll down to Retirement.

1. Traditional and Roth Contributions - start
2. Select traditional IRA and ROTH IRA, continue
3. Repayment- no
4. How much contributed to traditional IRA $6000, continue
5. How much transferred to Roth, entire amount
6. Fill out the worksheet for recharacterized amount
7. continue 
8. Retirement plan coverage, yes or no,
9. Excess IRA prior, no
10. Nondeductible yes or no, continue on through the program.

The yes or no questions above pop different scenarios. You will see the program says the amount recharacterized and is handling it all. Just carefully answer each question.

[bfiegoli]

Thank you!!

[AmyC]

Glad we could help!