Hi,
1. For 2019, I am making both the maximum Roth contribution and a Roth conversion this year. Therefore, there is no traditional IRA contribution this year.
2. The conversion leverages funds in my traditional IRA account that were deposited in earlier years.
3. The traditional IRA account has nondeductible contributions (from earlier years), as well as deductible contributions and tax deferred investment growth. Hence I need to split my conversion between taxable and non-taxable portions and pay tax on the taxable portion.
4. However, TT doesn't prorate the conversion amount - it puts the entire conversion as taxable.
I have tried to delete and re-enter both the 1099-R and my Roth IRA contribution, but to no avail. FWIW, I suspect this is happening because this conversion is not a real backdoor conversion - since I haven't made any traditional IRA contribution this year.
Has anyone run into this problem?
TIA.
Did you do the following? What is on the 8606?
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 left side) 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, 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. Select that you converted to a Roth.
[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.]
You will be asked of you had and tracked non-deductible contributions - say yes. The enter the amount from the last filed 8606 form line 14 if it did not transfer. Then enter the total value of any Traditional, SEP and SIMPLE IRA accounts that existed on December 31, 2019.
That will produce a new 8606 form with the taxable amount calculated on lines 6-18 and the remaining carry-forward basis on line 14.
First, thank you, @macuser_22, for the detailed reply.
The problem is that the form 8606 doesn't get produced. I went through the entire flow a couple of times in exactly the manner you describe, including marking the withdrawal for a Roth conversion.
I have also provided the basis for my traditional IRA and the year end value. I don't have SIMPLE or SEP accounts, and have only one traditional IRA account.
Delete the 1099-R and re-enter. Do you get the "enter past non-deductible contributions" and year end value questions?
Is the IRA/SEP/SIMPLE box on your 1099-R checked?
Is box 7 a code 1,2 or 7?