backdoor Roth Conversion

[ab20422]

I'm 71 and retired and have an existing 6 figure IRA. I took $25k from this IRA and converted it to a Roth IRA (a backdoor IRA?) I also cashed out about 20K from the same IRA during the year. My single 1099R only shows the $45k total withdrawal. How do I enter this in TurboTax?  When I try to go through the "IRA Contributions" section, I'm getting a message that says i've exceeded the contribution limit.  Thanks for the help.

[MaryK4]

After you enter the 1099-R information, you will answer a few follow-up questions (this will be after you see the 1099-R Summary).  Look for the screen below where you can indicate the ROTH conversion.

You have a conversion when you move assets held in a non-Roth IRA (traditional IRA, SEP IRA, or SIMPLE IRA) to a Roth IRA. It’s called a conversion because you are moving the money from a pre-tax account to an after-tax account. When you convert to a Roth IRA, you pay tax on the taxable portion of your distribution.

[ab20422]

Yes.  I have that done and entered the portion of the amount that was converted to a Roth.  Do I then also need to enter this in the "Traditional and Roth Contributions" section?  If I try to do that, it tells me that a) I owe additional taxes on the amount, and b) that the contribution amount exceeds the allowable amount.  How do I enter it in that section?  Thanks.

[RaifH · Accepted solution]

No, nothing needs to be done in the IRA Contribution section. Since this is a conversion, not a contribution, it does not need to be entered there. The system is saying you over-contributed because the maximum contribution is only $7,000 or your earned income for the year, whichever is less. 

[WEK]

I did follow some advice and started fresh and entered this IRA two steps prior to downloading any 1099 information from external sources.

I have struggled a bit on this back door two step process to enter in a IRA traditional conversion to a Roth IRA .  Entering in the first step of a traditional IRA contribution generated numerous forms and the 6% penalty tax for excess contributions.  I have entered the 1099-R manually for the Distribution from the Traditional IRA and answered all questions which, in the Premier version of TT does address the fact that this is a conversion to a Roth.  I recognize this becomes taxable income based on the percentage of the non-deductible contributions to the IRA verses the value balance of the total Traditional IRA at the end of 2021. After looking at this in the Forms with all the noise created from the Step one of creating a Traditional IRA contribution which matches the amount of the Conversion to the Roth IRA, I decided to delete the step 1 entry and it appears in the forms view to have eliminated all the noise from the Step 1 of the two step process.  So is this just a one step process provided it is the first thing entered into TT?

Am I missing something?

Thanks

WEK