Return of non-deductible contributions to Traditional IRA?

[shr22]

Thank you dmertz for your patience with me.

I had a IRA-IRA rollover in Dec. 2021, so if I understand correctly, I'm out of luck to rollover the distribution, right?

And, I can't convert the non-deductible contribution to Roth tax free, since it has already been distributed, right?

I have started amending my 2021 return by entering the $7000 distribution that asks to create a substitute 1099R. Should I say NO to the 1099R substitute?

How do I change form 8606? It won't let me change the values on the form. Should I enter 0 for contributions when going step-by-step to undo/reverse original 8606?

[dmertz]

You are permitted to convert any regular distribution to Roth, either as an internal transaction by the IRA custodian or indirectly.  The Roth conversion contribution does not even need to be with the same IRA custodian.  Any Roth conversion is by definition a regular distribution from the traditional IRA and a taxable rollover to the Roth IRA.

No Form 1099-R, substitute or otherwise, is to be entered into 2021 TurboTax in the process of amending your 2021 tax return.  The simplest approach is to simply change your traditional IRA contribution amount to zero.  You can also do it by taking a convoluted approach by telling TurboTax that you made a $7,001 traditional IRA contribution and when TurboTax indicates that you have an excess contribution and asks how much you had returned you indicate $7,001.  Either way simply removes the contribution from Form 8606 (and from Schedule 1 if you had the case where some portion of the contribution was deductible).  Whichever you do, TurboTax will simply remove Form 8606 so you'll have to prepare the necessary amended Form 8606 manually outside of TurboTax.

[shr22]

Thank you dmertz.

If I have to prepare 8606 manually outside TurboTax, how can I  efile it with the amendment?

What do I enter in the new 8606?

1. 7000

2. 0

3. 7000

4. 7000

5. 0

6. IRA value

7. 0 (return of contribution)

so on

[dmertz · Accepted solution]

The amendment must be filed on paper and mailed to include the manually prepared amended Form 8606.

The as I've said several times before, line 1 of the amended Form 8606 will have a zero on line 1 because with the contribution returned there is no contribution to report.  You'll also have a zeros other lines in part 1 where you previously had non-zero amounts.  Leave line 6 blank since it's not involved in any calculations on Part I.

[shr22]

Thank you dmertz. You have been so helpful. I appreciate your help.

Sounds like the new 8606 will be all zeros. Is that right? It needs to be filed to clear the original?