Hello -
In 2023, I opened a Traditional IRA Brokerage Account with Vanguard so I could make what is called a Backdoor Roth IRA contribution (because of income limits I no longer qualify for a Roth IRA). In 2023, I made a $6,000 contribution to my Traditional IRA Brokerage Account for tax year 2022. I reported this amount on Form 8606 when filing my 2022 taxes. I then converted this to a Roth IRA in 2023 (this will be reported on form 8606 when filling my 2023 taxes). In 2023, I also contributed $6,500 to my Traditional IRA Brokerage Account for tax year 2023. I then converted this to a Roth IRA in 2023. Both transactions will be reported on Form 8606 when filing my 2023 taxes.
That said, I recently received a tax document from Vanguard called 2023 Form 1099-R. Below are the values on the form. I need help understanding what they mean and how I should report these numbers when filing my 2023 taxes. Please help me understand what is being reported here.
1. Gross distribution = $12,503.58
2a Taxable Amount = $12,503.58
2b Taxable amount not determined = (X)
Total distribution = (X)
7 Distribution code(s) = 2
IRA/SEP/SIMPLE = (X)
8 Other amount
Other amount percentage = %
9a Your percentage of total distribution = %
12 FATCA filing requirement = ( )
16 State distribution = $12.503.58
In 2022 on Form 8606, I reported the $6,000 contribution to a Traditional IRA
In 2023 on Form 8606, I need to report the $6,000 conversion to a Roth IRA
In 2023 on Form 8606, I need to report the $6,500 contribution to a Traditional IRA and then converting to a Roth IRA
The Vanguard Form 1099-R states $12,503.58 and not $12,500 (2022 = $6,000 & 2023 = $6,500). The difference is because the value of the contribution grew as I was converting from a Traditional IRA to a Roth IRA. I am assuming I will have to pay taxes on the $3.58.
Please help me understand how to correctly report the necessary information when filing my taxes.
Thank you so much
1: The actual amount transferred to the Roth IRA
2a: What the taxable amount would be if you had no basis in nondeductible traditional IRA contributions.
2b Taxable amount not determined: The actual taxable amount must be determined on Form 8606.
2b Total distribution: This transaction emptied the traditional IRA account.
7: Code 2 with the IRA/SEP/SIMPLE box being marked: The transaction came from a traditional IRA and there is no early-distribution penalty on the transaction.
8: Meaningless for this type of transaction.
9a: Meaningless for this type of transaction.
12: Meaningless for this type of transaction.
16: The amount that the state considers to be reportable, always the same as the amount in box 1 for this type of transaction.
Hello -
I wanted to check in regarding my initial post. Can someone help me with my tax questions?
Thank you
Here's How to Enter a Back-Door Roth Conversion. It's a two-step process.
You’ll receive a Form 1099-R with code 2 in box 7 (or code 7 if your age is over 59 ½) in the year you make your Roth conversion. You should report your conversion for the year you receive this 1099-R:
Form 8606 will be prepared for you in TurboTax as you go through the interview. Here's more info on Form 8606.
Hello -
Thank you.
I received 2023 Form 1099-R. What do the below values mean? The only part you clarified was code 2 in box 7. What does everything else mean in layman's terms?
1. Gross distribution = $12,503.58
2a Taxable Amount = $12,503.58
2b Taxable amount not determined = (X)
Total distribution = (X)
7 Distribution code(s) = 2
IRA/SEP/SIMPLE = (X)
8 Other amount
Other amount percentage = %
9a Your percentage of total distribution = %
12 FATCA filing requirement = ( )
16 State distribution = $12.503.58
Thank you.
1: The actual amount transferred to the Roth IRA
2a: What the taxable amount would be if you had no basis in nondeductible traditional IRA contributions.
2b Taxable amount not determined: The actual taxable amount must be determined on Form 8606.
2b Total distribution: This transaction emptied the traditional IRA account.
7: Code 2 with the IRA/SEP/SIMPLE box being marked: The transaction came from a traditional IRA and there is no early-distribution penalty on the transaction.
8: Meaningless for this type of transaction.
9a: Meaningless for this type of transaction.
12: Meaningless for this type of transaction.
16: The amount that the state considers to be reportable, always the same as the amount in box 1 for this type of transaction.