Roth Rollover

[dwsrft2000]

During 2019 I made a rollover transfer from my IRA simple to a new Roth IRA.

I withdrew $30k, deposited $20k to the Roth and allocated $10k for taxes.

Schwab provided a 1099R  coded 7 IRA simple and when I enter that it enters $30k on the 8606 on line 7.

However, I cannot enter $20k on line 8 which I would think would subtract  from the above taxable amount and recalculate when entered as a rollover.

Much later, now, Schwab sent a form 5498 describing the $20k Roth conversion with no codes except

Roth IRA.

If I enter that  as a rollover amount below on form 8606 I will be taxed twice on the $20k.

Please help if you can

[macuser_22 · Accepted solution]

A 5498 is information  only and is not entered on  a tax return.

An Traditional IRA to Roth is a conversion that is taxable unless you had a non-deductible basis in the IRA.

The 8606 would only have a line 7 entry is you indicted that you had non -deductible basis in the IRA then it should have the $10K that was distributed and line 8 would have the $20K converted to the Roth.

Sounds like you entered it wrong.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR  Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

If this was a rollover or conversion, answer the question that you moved the money to another retirement account (can be the same account). The screen will open up with choices of where it was moved.  Say that you did a combination  of things and enter the $20K converted amount in the bottom box.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

[Carl]

Just a heads up here:

I withdrew $30k, deposited $20k to the Roth and allocated $10k for taxes.

The 20K rolled over is subject to taxes, as I"m sure you know.

The 10K that you did not roll over is also subject to taxes *AND* a 10% early withdrawal fine if you were not of retirement age at the time of the withdrawal.  The fact you "withheld for taxes" doesn't matter. But it can be exempt from the fine if you have claim to having withdrawn it for a valid COVID-19 purpose, such as losing your job *BEFORE* you made the withdrawal.

[dwsrft2000]

Great answer and completely solved my problem