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Level 2
March 24, 2025
Question

Reporting Backdoor Roth on 1099-R

  • March 24, 2025
  • 7 replies
  • 54 views

Context: I did a backdoor Roth IRA by opening a Traditional IRA account (i.e., zero basis / zero balance), making a $7,000 nondeductible contribution to a Traditional IRA, and then moving the entire balance in the Traditional IRA (i.e., $7,000) into a Roth IRA. However, a few days after I moved-out the money into Roth, a tiny amount of interest was added to my Traditional IRA account (about $4). 

 

Question 1: When I enter-in the payer information exactly as it appears in the 1099-R, it appears as "National Financial Services LLC as agent for" ("Fidelity Investments" is not included, since it's on the second line of the 1099-R). This feels strange -- is this correct?

 

Question 2: The 1099-R that Fidelity sent me has the "Total Distribution" checked in box 2b. It was a total distribution when I made the conversion. However, since I afterwards received an interest payment, there now is money in the IRA account that I'm reporting a "Total Distribution" from. Is that an issue?

 

Question 3: Because of my nonzero (i.e., $4) Traditional IRA balance at year-end, there should be a pro rata tax on the conversion. I see this as a $4 amount in 4b on my 1040 -- the exact same as if I had waited until the interest payment hit my and then converted the full $7,004 into a Roth. Is this correct -- the pro rata payment appears on the tax forms in the same way that a payout of earnings would?

7 replies

Alumni - Intuit
March 25, 2025

Question 1:  National Financial Services is correct.  They are subsidiary of Fidelity and they do clearing (back office) for Fidelity and other brokers.  Don't worry about the "agent of..." part.  It's not an issue.

 

Question 2:  Not an issue that you received $4 after taking a distribution marked as "Total Distribution".

 

Question 3:  Was the $4 reported in box 2a?   If not, enter zero in box 2a.  I don't think there should be $4 on line 4b or your 1040, but it's only $4.    

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ADP4Author
Level 2
March 25, 2025

Thanks David.

 

 

Re. the third question, here's what I see on my 1099-R

 

Alumni - Intuit
March 26, 2025

No picture came through on that.

 

@ADP4 

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