Backdoor Roth in the same year as 401k rollover

[mkjcm3101]

In February 2024, I made a nondeductible contribution of $8000 to a traditional IRA that had a 0 balance at the end of 2023. Then I made a backdoor conversion to a Roth with all of the funds within a week, leaving a 0 balance in the traditional IRA. A few months later in 2024, I made rollovers of 401k and 403b funds (all were originally deductible) to the same traditional IRA. Following all of that, I made a distribution of $31,000 from the traditional IRA for spending in 2024. How should I report these transactions in Turbotax? The instructions say to delete the 403b rollover as the 1099-R has a Q distribution code. I never got a 1099R for the 401k rollover (same provider as traditional IRA). Is the Roth Backdoor conversion fully deductible so not counted as income? TurboTax wants to count the Roth Backdoor as income and deduct a small amount (1% which is the Roth share of the IRA balance at the end of 2024) of the $31,000 from income??? I must be doing something wrong.

[dmertz · Accepted solution]

You will receive the From 1099-R for the rollover from the 401(k) to the traditional IRA.  Wait for it since it should now be in the mail.

Having a nonzero balance in traditional IRAs at the end of 2024 due to the rollover of the 401(k) has rendered your Roth conversion largely taxable, with a large portion of your basis in nondeductible traditional IRA contributions remaining with your traditional IRAs to be applied to future traditional IRA distributions.  In addition to a substantial part of your Roth conversion being taxable, some portion of your $31,000 will be nontaxable in the same proportions as your Roth conversion.

Code Q reports a regular distribution from a Roth IRA.  It has nothing to do with a distribution from any employer plan like a 403(b)  or a traditional IRA.  Perhaps you made a distribution from a Roth IRA in 2023 year and TurboTax transferred in the code-Q Form 1099-R in anticipation of you making a similar distribution in 2024.  If you received no code-Q From 1099-R this year, delete the unnecessary Form 1099-R from TurboTax.