Not able to record backdoor Roth Conversion

[jstephenj14]

I'm trying to follow this article regarding backdoor Roth Conversions from Traditional IRAs.

More specifically, I'm trying to follow 2 step process under TurboTax Online of that page. At Step 1, I'm never shown the pages from points 8:"Did You Change Your Mind?" and the subsequent point 9:"Choose Not to Deduct IRA Contributions" thus preventing me from recording the conversion.

Can someone help me figure this out?

[DanaB27]

Please be aware, if you had a retirement plan at work and are over a certain income then your traditional IRA contribution is automatically nondeductible and you won't be asked to make it nondeductible. 

Could it be that you had selected "Yes" before on the screen "Did you change your mind?". If you did then that screen will disappear. Do not enter anything as transferred or recharacterized in the IRA contribution interview. If you did, then please delete that entry. 

You will only enter the traditional IRA contribution, your basis from prior years (if applicable), and make it nondeductible if it isn't automatically nondeductible.

To enter the nondeductible contribution to the traditional IRA:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2021 Form 8606 line 14 (if you had a basis in the prior year)
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

To enter the 1099-R conversion: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue"
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

[jstephenj14]

Hi, thanks for your response. I followed these prompts but am facing the same issue. I think I've found the problem which I will delineate below:

1. During 2022, I had a total distribution of $11500 from my Traditional IRA. A total of $5500 from this was for my Roth IRA backdoor for 2021 and the other $6000 was for the Roth IRA backdoor for 2022. I understand that both of these are not taxable events.

2. When I enter my 1099-R which records $11500, the software marks $6000 as a a non-taxable event but marks the remaining $5500 to be taxable. This is evidenced by the following snapshot from the 1040 document:While the 4a entry is correct, 4b should reflect 0 instead of $5499.

Please let me know how I can rectify this. Thank you.

[DanaB27]

You will need to enter your basis from your 2021 Form 8606 line 14 ($5,500). Please review the instructions above you can enter the prior year basis either when you enter the IRA contribution (steps 8 and 9) or after you enter Form 1099-R (steps 6 and 7).

You should have reported the nondeductible traditional IRA contribution for 2021 on your 2021 return and have a 2021 Form 8606 with the basis on line 14.

@jstephenj14 

[jstephenj14]

Got it, thanks for your help! It looks right now, will get back to you if I face any more questions.

[jstephenj14]

Hi,

I changed the basis as you suggested but now I'm seeing the following issue. I suspect this is because box 2b of my 1099-R is marked. Can you help me with this? Thanks

[DanaB27]

You converted $11,499,10 in 2022, correct? In this case, you would delete the $6,000 shown for Partial Roth Conversion on the “Check this Entry” screen.

You can also review your entries for the Roth conversion on the “Did you convert all of this $11,499.00 (Box 1) to a Roth IRA?” screen. If you converted all of it (and didn’t have taxes withheld) then you will select “Yes, all of this money was converted to a Roth IRA”. 

@jstephenj14