In 2024 I did a rollover of after-tax contributions from my 401K to a new Roth IRA. Several months later I took a distribution from this Roth IRA for an amount that was about 25% of the rolled over amount. I got two 1099-R forms for 2024. One was for the rollover of after-tax 401K contributions which show on Line 5 in the 1099-R. The 2nd 1099-R showed the Roth IRA distribution with a Box 7 code of T.
TurboTax has my 2024 Roth IRA distribution as a taxable amount. It will not populate Form 8606 Line 24 with what I believe to be the basis from my rollover. So this basis does NOT get subtracted from the distribution amount in Part III of Form 8606.
I am convinced by reading IRS docs, that my distribution, although non-qualified, is NOT taxable. Is there a bug in TurboTax?
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What is the code in box 7 of the Form 1099-R from the 401(k)?
If the amount in box 1 is greater than the amount in box 5, is the difference shown in box 2a?
When entering this Form 1099-R into TurboTax, did you explicitly indicate that this distribution was rolled over to a Roth IRA (and not to a designated Roth account in the 401(k)?
The code in Box 7 for the rollover 1099-R is G. The amount in Box 1 is much larger than Box 5. This is because later in 2024, I rolled all of my pre-tax 401K contributions into a new Traditional IRA. Box 2a has a value of 0.
If I answer 'yes' to the TurboTax question:
then later TurboTax asks me:
to which I answer yes, and give the full after-tax rollover amount.
But neither Form 8606 Line 22 nor Line 24 get populated by TurboTax.
If I don't answer yes to the first question above, then the rollover amount is never asked about by TurboTax.
Also, to a later TurboTax statement of:
Enter Prior Year Roth IRA Contributions
if I enter my after-tax roll over amount to the prompt: Roth IRA Contributions prior to 2024
then my non-qualified distribution becomes not taxable because TurboTax then populates Form 8606 Line 22 which gets subtracted from my distribution.
But I don't think this is the correct thing to do in my case, since I didn't have a Roth IRA until 2024. But I did make several years of after-tax contributions to my old 401K.
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