TIRA Distributions To Employer 401K and Roth IRA - How to Enter Into TT?

[nc cpl]

Took advantage of the option to move the pre-tax portion of my traditional IRA into my employers 401k (they allow it). I did this so I could separate it from the after-tax contributions I had made over many years (yes, I had co-mingled pre and after tax contributions in my TIRA). The remaining after-tax portion was then rolled into my Roth IRA. Recap: pretax $ went to my 401k, and after-tax $ went to the Roth. I received two 1099-R's from Vanguard: the one for the pretax rollout to the 401K (Line 2a - shows not taxable (seems correct); but the second 1099-R for the portion that went into the Roth (line 2a - shows the entire amount as taxable, Line 2b box  "Taxable amount not determined" is checked). Vanguard says they consider any rollouts from an IRA as taxable and have no way of knowing or differentiating pre from post tax contributions, and the transaction confirmation document" refers to it as a "rollover conversion" if that matters. The money did all end up in the right accounts so no errors in that regard.

Aside from the above, how do I enter these two transactions in TT to make sure I'm not taxed a second time on the portion that went to the Roth, and how I can check it for correctness?

[RaifH · Accepted solution]

To enter the conversion of your traditional IRA to a Roth IRA, you will need to know the basis in your traditional IRA account at the beginning of the year and the value of all your traditional IRAs at the end of the year, if any. Enter it this way:

1. Go to Federal > Wages & Income > Retirement Plans & Social Security > IRA, 401(k), Pension Plan Withdrawals (1099-R) and click Start / Revisit.
2. Add your 1099-R with all the information the same
3. Confirm whether or not the IRA/SEP/Simple box is checked.
4. After a few more screens, Tell us if you moved the money through a rollover or conversion select I converted some or all of it to a Roth IRA and confirm you converted the entire amount.
5. Once you return to the Your 1099-R Entries, select Continue
6. Answer the disaster distribution question
7. Select Yes to Any Nondeductible Contributions to your IRA?
8. Enter the basis as of December 31, 2020. If you did it right, this should be the amount of the conversion to a Roth
9. Enter the value of your Traditional IRA and any outstanding rollovers and characterizations. If you did everything before the end of the year and completely emptied out your Traditional IRA, this should be 0. Please note this is the value of all your traditional IRAs. If you have other IRAs, you must include their value as well. 

To verify everything is in there correctly, you can preview your Form 1040:

1. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
2. With the Tax Tools menu open, you can then: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu.
3. Scroll down until you see Form 1040 Line 4. Line 4a should have the entire distribution amount from your traditional IRA, including the rollover to 401(k). Line 4b is the taxable amount and should be blank.

[nc cpl]

My steps look a bit different. Yours are:

• After a few more screens, Tell us if you moved the money through a rollover or conversion select I converted some or all of it to a Roth IRA and confirm you converted the entire amount. (ON my screen it looks like this, with the options checked as shown below):
  

• Once you return to the Your 1099-R Entries, select Continue (Done)
  
• Answer the disaster distribution question (Done )
• Select Yes to Any Nondeductible Contributions to your IRA? (Done - it pulled in my basis as of year end 2020)
  

• Then it ask for the "Value of Your Traditional IRA" and to enter the total value of TIRA's, SEP and SIMPLE accts as of 12/31/21. I only had the one TIRA. I entered  $6 (as shown below) since both of the rollouts essentially lowered the remaining balance to that amount (to keep the account open).
  

• Verification (based on what you indicated) confirms the total amount that came out of the TIRA equals the amount that went to the 401K + the amount that went to the Roth IRA) on Line 4a, and Line 4b has "zero."

[nc cpl]

Is this correct and am I done?

[MarilynG1]

Yes!  Line 4a shows your total distributions, and Line 4b the taxable amount ($0 in your case).