401k to Roth IRA

[sue69]

I'm using Turbo Tax desktop premier version.  I did a direct rollover from a 401K to a Roth IRA.  The 1099-R appears to be correct - Gross distribution - 25K, taxable amount - 25K, distribution code - G.  When I enter it in Turbo Tax, if I select that I rolled it over to a Roth IRA, it doubles the taxable amount (50k) in 1040 box 5b.  If I select that I did not roll it over to a Roth IRA, it doesn't add anything to 1040 box 5b.  The only way I can get it to put the correct amount (25K) in box 5b is to change the distribution code to 7, but this doesn't seem correct, since it was a direct rollover.  This seems like aTurbo Tax bug.  I've seen some similar posts, but not this exact scenario - most of them had a 1099-R that incorrectly showed a taxable amount of zero.

[Mike9241]

could not duplicate your problem I'm using desktop deluxe

gros distribution and taxable the same amount

code G

checked the box (b5)  in desktop deluxe that the entire amount was converted to ROTH

b4 pops up the same as the taxable amount

the 1040 shows rollover and $25K taxable.

this forum has no access to your return to see what you did or if this is just a bug in one desktop version.

[dmertz]

Do you have any other Forms 1099-R entered?  Years ago TurboTax had a problem dealing with some combinations of Forms 1099-R, particularly those involving distributions from a designated Roth account in an employer plan (code H or code B included in box 7).

[sue69]

Update:  I had also indicated in TT that $275 of the 25K was after-tax contributions.  This appears to be what is triggering the doubling of the taxable amount.   If I remove the after-tax contribution, everything seems to work fine.  It's still a bug I think, but since it's such a small after-tax amount, I'm not going to worry about reporting it and getting it excluded from taxation.

[sue69]

Yes, I have several other 1099-R's but they are all for normal distributions.  I think I found what is triggering the problem - after-tax contributions.  See my update.

[dmertz]

Your Form 1099-R doesn't seem to make sense.  If you rolled over $25k of which $275 was after-tax basis, your Form 1099-R should have in box 2a an amount $275 less than the amount in box 1.  If box 2a and box 5 properly sum to the amount in box 1, TurboTax behaves correctly.

TurboTax does sometimes produce nonsensical results when a nonsensical Form 1099-R is entered.

[sue69]

I agree, the taxable amount in box 2a should have been $24,725, OR the taxable amount not determined box should have been checked, but the issuer reported it all as taxable.  And since turbo tax asked me if any of it was after-tax contributions, I took that as an opportunity to claim my after-tax contribution.

[dmertz]

If  you actually had basis in after-tax contributions, you could ask the payer for a corrected Form 1099-R.  As it is, if box 5 of the Form 1099-R is blank, the payer believes that you had no basis in after-tax contributions.

$275 is an unusually small amount of after-tax basis to have in a 401(k).  I'm not sure I can imagine a scenario where that would arise.  Note that an uncorrected excess elective deferral does not result in after-tax basis even though the excess must be included in taxable income.

[sue69]

The $275 dates back to a pre-1983 after-tax contribution.   Alight knew about it when I did the rollover in April.  Their website specifically asked if I wanted to roll it over.  In July, our 401K management switched from Alight to Vanguard, and the 1099-R was issued by Vanguard, not Alight.  It's probably not worth pursuing for such a small amount.