Why is mega backdoor roth contribution showing as income?

[tb001]

Context: I made contribution to mega-backdoor roth last year i.e.

I made $X non-Roth after-tax contributions to my 401(k). I did Roth in-plan conversion and immediately converted the money to the Roth account within the plan. My contributions didn't earn any interest income as I immediately converted $X to my Roth account

Question: Why is the entire mega-backdoor contribution showing up as income in turbotax? This was after tax money and there was "0" interest earned before conversion. If the mega-roth contribution is showing up as income, am i not being double taxed on the after-tax money on which i have already paid tax?

Am i doing anything wrong?

[DanaB27]

Can you please check Form 1040 line 5b if it shows as taxable? Please be aware that the whole distribution will show as income in TurboTax on the summary screen which shows gross income, not taxable income.

If this doesn't solve your question what is your code in box 7? You have the after-tax contributions listed in box 5 and entered this, correct? Please make sure you answer the follow-up questions carefully after you enter your Form 1099-R.

[tb001]

Form 1040 line 5b is "0". So does this means I not getting double taxed on MegaRoth contributions and entered things correctly? 

There are 2 pages on same 1099-R and both pages have different information for Box 5 and Box 7.

- Box 7 is "G" on page 1 and "P" on Page 2.

- Box 5 has different amounts on both pages as well.

I entered both pages as 2 separate 1099-R. Is that they right way of doing it?

I got a notification that I will have to make amendment to last year taxes because of this. 

[DanaB27 · Accepted solution]

Yes, it seems you have entered it correctly since $0 is taxable with your conversion.

Generally,  2022 Form 1099-R with code P would be issued if you made a 2021 excess deferral to your 401(k) and removed it in 2022.

If you didn't add the excess deferral amount to your wages on your 2021 tax return, you must file an amended return on Form 1040-X. If you didn't receive the distribution by April 15, 2022, you must also add it to your wages on your 2022 tax return. 

Please see Pub 525 for additional information.

@tb001