Withdrawal from Employer-based Retirement Account to Rollover IRA ->Traditional IRA -> Roth Conversion

[Green16]

Hello,

I'd appreciate some help on this! During 2020, I withdrew the full amount from my Teacher Retirement account/public pension plan (let's say $3,000, for simplicity's sake) into a rollover account (Fidelity brokerage), and then rolled that over into a traditional IRA (also Fidelity). Note: that teacher retirement account/public pension plan was funded with pre-tax dollars. After I completed this direct rollover (in less than 60 days) to my traditional IRA, I then converted the full amount to my Roth IRA (again, with Fidelity).

Now, I received two 1099-R forms. The first form is from the employer-retirement account/custodian and has box 1  "Gross distribution" filled in with the amount $3,000 and the rest of the boxes blank (including 2a "Taxable amount" as $0). The second form is from my brokerage/Fidelity account regarding the rollover/conversion and has the both boxes 1 "Gross distribution" and 2a "Taxable amount" both each filled with $3,000 while the rest of the boxes are blank).

I'm aware that the direct rollover (from employer account to rollover IRA to traditional IRA) is a non-taxable event (since I moved the money from a pre-tax account to another pre-tax account), but I know that the conversion to a Roth IRA is a taxable event (please feel free to correct this if wrong). Could I please get "step by step" instructions on properly inputting these two 1099-R forms (that goes over the actual Turbotax question answers on each page so that I don't make any small errors)? I want to avoid being taxed twice or taxed incorrectly for this (summary of situation: I withdrew full amount from employer-based retirement account to rollover IRA to a traditional IRA, then converted that full amount to a Roth IRA within the same year). 

Thank you in advance. Please let me know if I may provide any clarifications.

[Cynthiad66]

Yes.  You have interpreted the Form 1099Rs accurately.  It is really quite simple.  Enter the 1099s as they are and TurboTax will translate them accurately.  By entering the two Forms 1099Rs it will show the withdrawal and rollover and conversion accurately.  Here is how to enter a Form 1099R:

To Enter Form 1099-R:

1. Select the Federal Taxes Tab

2. Select the Wages & Income Sub-Tab

3. Choose Explore On My Own

4. Scroll down the page which should now show a list of available areas to visit

5. Under the Retirement Plans and Social Security section you should now see the IRA, 401(k), Pension Withdrawals (1099-R) section. You will want to select the Start option to the right.

For more information on the form 1099-r, select the link below.

https://turbotax.intuit.com/tax-tools/tax-tips/IRS-Tax-Forms/When-to-Use-Tax-Form-1099-R--Distributi...

Per @

RyanH2

[Green16]

Thanks for that info. Follow up questions for entering each of these 1099-R forms.

For the First 1099R (From Public pension plan/Custodian, regarding the withdrawal/distribution)

1) For the question, "Did you move the money to a Roth IRA? For rollovers to other types of retirement accounts (such as a traditional IRA), just answer No." I would answer "No", right? Because the money was directly rolled over to a rollover/traditional IRA account. And although I ultimately did do a conversion to a Roth IRA, that was as a last step and a separate/final transaction. Please correct me if I misinterpreted this. I noticed that when I put "yes" to this question my tax liability goes up significantly, so this also adds to my belief that the answer is to put "no", but I could be wrong.

For the Second 1099R (from Fidelity, regarding the Rollover/Conversion)

2) For the question, "Tell us if you moved the money through a rollover or conversion. We need to check if you moved any of this money into another retirement account (or returned it to the same account). In some cases, this can lower your tax liability." [Choose from one of the following:]

*a) I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)

*b) I converted some or all of it to a Roth IRA

*c) I did a combination of rolling over and converting some or all of this money

*d) I didn't rollover or convert this money

This question confused me because technically I did both steps a) and b) throughout this whole process. First, I did step "a", which was a direct rollover (within less than 60 days) of the funds from my pension plan into my Fidelity rollover/Traditional IRA account, and then my final step, "b", was doing a Roth conversion of that full amount. So, would I choose choice "a" or "b"? I assumed choice "b" since the conversion to a Roth IRA was a final step and step "a" was the prior step. I tried both choices a) and b) and apparently they didn't change my tax liability, but regardless I want to choose the correct option just incase and to prevent any errors on my taxes.

I appreciate the help!

[DanaB27]

First 1099-R:

Yes, for the question, "Did you move the money to a Roth IRA? For rollovers to other types of retirement accounts (such as a traditional IRA), just answer No." you would answer "No".

For the second 1099-R:

For the question, "Tell us if you moved the money through a rollover or conversion. We need to check if you moved any of this money into another retirement account (or returned it to the same account). In some cases, this can lower your tax liability." you will select "b) I converted some or all of it to a Roth IRA".