Two different IRA Events in the Same Year (Converted IRA to Roth AND Backdoor Roth)

[meg-han77]

I had two different IRA events occur in the same year.

1. I converted an amount from a Traditional, SEP, or SIMPLE IRA to a Roth IRA.  My 1099-R from Vangard shows this as a gross distribution with $0 taxable amount, total distribution is checked, distribution code G, and IRA/SEP/SIMPLE is checked.  This account was an IRA for years and has both contributions and earnings before I converted it.  The taxable amount was not determined (however, the taxable amount not determined is NOT checked on the 1099)
2. I completed a backdoor Roth transaction.  My 1099-R from Vangard shows this a gross distribution with the full amount as taxable.  Taxable amount not determined is checked, total distribution is checked, distribution code 2, and IRA/SEP/SIMPLE is checked

The software appears to be generating one combined Form 8606, but only the $3k backdoor portion is appearing in Part I, while the $22k conversion is being treated as fully taxable and bypassing the basis calculation.

I am getting an error that for the conversion, box G is incorrect (it expects code 2 or 7).  I do not know if completed the conversion incorrectly in Vangard and need a corrected 1099-R OR if I am entering this incorrectly into TurboTax. 

[meg-han77]

Disregard, solved.  I made a mistake but don't know how to take down this question

[dmertz · Accepted solution]

A Form 1099-R with code G in box 7 and the IRA/SEP/SIMPLE box marked is only for reporting a rollover from a traditional IRA to a traditional account in an employer plan like a 401(k).  Such a rollover is always entirely nontaxable.  Code G with the IRA/SEP/SIMPLE box marked cannot be used to report a rollover to any kind of Roth account.

If this distribution was indeed deposited into a Roth IRA, you'll need to get a corrected Form 1099-R from Vanguard.  If they refuse, you'll need to submit a substitute Form 1099-R using code 1 or code 2 (either will produce the same result because the conversion to Roth is not subject to an early-distribution penalty).

Code G means a direct rollover to or from an employer plan.  Perhaps someone made a mistake by thinking that a Roth conversion is a direct rollover; by definition, it's not.