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How do I enter a backdoor Roth IRA conversion?

by Intuit Updated 2 months ago

A backdoor Roth IRA allows you to get around income limits by converting a traditional IRA into a Roth IRA. You'll get a Form 1099-R the year you make the conversion.

Contributing directly to a Roth IRA is restricted if your income is beyond certain limits, but there are no income limits for conversions.

Your 1099-R will say code 2 in box 7 (or code 7 if your age is over 59 ½) . You should report your conversion for the year you receive this 1099-R:

  • If you received this form in 2023, complete both steps below to report it on your 2023 taxes.
  • If you'll receive this form in 2024, wait to report it on your 2024 taxes. In this case, only complete Step 1 below for your 2023 taxes. You’ll complete both steps next year when filing your taxes for 2024.

Doing a backdoor Roth conversion is a two-step process.

Note: If your TurboTax navigation looks different from what’s described here, learn more.

Step 1:  Enter the Non-Deductible Contribution to a Traditional IRA

  1. Sign in to your TurboTax account.
  2. Open your return if it’s not already open.
  3. Select Federal from the menu, then Deductions & Credits.
  4. Locate the Retirement and Investments section and select Show more.
  5. Select Start or Revisit next to Traditional and Roth IRA Contributions.
  6. Check the Traditional IRA box and select Continue.
  7. Answer Yes to the question, Did you Contribute To a Traditional IRA?
  8. Answer No to the question, Is This a Repayment of a Retirement Distribution?
  9. On the screen, Tell Us How Much You Contributed, enter the amount contributed and select Continue.
  10. Answer No on the screen Did You Change Your Mind?, then answer the questions on the following screens.
  11. When you reach the Choose Not to Deduct IRA Contributions screen, select Yes, make part of my IRA contribution nondeductible, enter the amount you contributed, then select Continue. If none of your contribution can be deducted, you won't see the option to make part of it nondeductible. Instead, the full amount of your contribution will automatically be nondeductible.
  12. Select Continue on Your IRA Deduction Summary.

Step 2:  Enter the Conversion from a Traditional IRA to a Roth IRA

  1. Select Wages & Income.
  2. Locate the Retirement Plans and Social Security section and select Show more, then select Start or Revisit next to IRA, 401(k), Pension Plan Withdrawals (1099-R).
  3. Answer Yes to Did you get a 1099-R in 2023?, then Continue.
    • If you land on the screen, Your 1099-R Entries, select Add Another 1099-R.
  4. Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions.
  5. Answer the questions on the following screens, until you reach Tell us if you moved the money through a rollover or conversion.
  6. Select I converted some or all of it to a Roth IRA and Continue.
  7. Next, choose Yes, all of this money was converted to a Roth IRA.
  8. Continue answering questions until you come to the screen, Your 1099-R Entries.

To check the results of your backdoor Roth IRA conversion, see your Form 1040:

  1. From the menu, select Tax Tools, then Tools (If you're currently using the TurboTax Mobile app, you'll need to sign in to the web browser version).
  2. Under Tools Center, select View Tax Summary.
  3. From the side menu, select Preview my 1040.
    • Your backdoor Roth IRA amount should be listed on Form 1040, Line 4a  as IRA distributions.
    • Taxable amount should be zero unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to Roth IRA, in which case the earnings would be taxable.
    • Schedule 1, Line 20, IRA deduction should be blank.
  4. Select Back to return to where you left off in TurboTax.

Step 1: Enter the Non-Deductible Contribution to a Traditional IRA

  1. Sign in to your TurboTax account.
  2. Open or continue to your return if it’s not already open.
  3. Select the Federal Taxes tab (this is Personal Info in TurboTax Home & Business), then Deductions & Credits.
  4. Select I'll choose what I work on.
    • On the list of sections, locate Retirement & Investments.
    • Then select Start or Update next to Traditional & Roth IRA Contributions.
  5. Check the box for Traditional IRA and Continue.
  6. Answer Yes to Did you contribute to a traditional IRA?
  7. Answer No to Is This a Repayment of a Retirement Distribution?
  8. On the Tell Us How Much You Contributed screen, enter the amount contributed and Continue.
  9. Answer No on the screen Did You Change Your Mind?, then answer the questions on the following screens.
  10. When you reach the Choose Not to Deduct IRA Contributions screen, select Yes, make part of my IRA contribution nondeductible, enter the amount you contributed, then select Continue. If none of your contribution can be deducted, you will not see the option to make part of it nondeductible. Instead, the full amount of your contribution will automatically be nondeductible.

Step 2: Enter the Conversion from a Traditional IRA to a Roth IRA

  1. Select Wages & Income, then I'll choose what I work on.
  2. In the list of sections, locate Retirement Plans and Social Security, then select Start or Update next to IRA, 401(k), Pension Plan Withdrawals (1099-R).
  3. Answer Yes to Did you have any of these types of income in 2023? and Continue.
    • If you land on the Your 1099-R Entries screen instead, select Add Another 1099-R.
  4. Select how you want to enter your 1099-R (import or type it in yourself) and follow the instructions.
  5. Answer No to Did You Inherit This IRA?
  6. Answer None of this distribution was transferred to charity.
  7. Select I moved the money to another retirement account (or returned it to the same retirement account) on the What Did You Do With The Money From This Payer? screen.
  8. Select I did a combination of rolling over, converting, or cashing out the money. Then, enter the full amount in the box next to Amount converted to a Roth IRA account and Continue.
  9. Continue answering questions until you come to the screen Your 1099-R Entries.

To check the results of your backdoor Roth IRA conversion, see your Form 1040:

  1. Select Forms from the menu.
  2. Select Form 1040 from the menu.
  3. Use the scroll bar to find:
    • Line 4a IRA Distributions. Your backdoor Roth IRA amount should be listed.
    • Line 4b Taxable amount should be zero, unless you had earnings between the time you contributed to your Traditional IRA and the time you converted it to a Roth IRA.
  4. Select Schedule 1 from the menu.
  5. Line 20 IRA deduction should be blank.
  6. To return to where you left off in TurboTax, select Step-by-Step from the menu at the top of the screen.

If your conversion includes contributions made in 2023 for 2022, you'll need to check your 2022 return to make sure it includes Form 8606, Nondeductible IRAs. If this form isn't included in your 2022 return, you'll need to fill out a 2022 Form 8606 to record your nondeductible basis for conversion, and mail this form to your designated IRS office. Don’t amend your 2022 return to record your basis. (Note: If you're required to file Form 8606 to report a nondeductible contribution to a traditional IRA, but don’t do so, you’ll be subject to a $50 penalty. This penalty can be waived if you can show reasonable cause.) 

To enter this prior-year basis in TurboTax:

  1. On the Here's your 1099-R info screen, select Continue.
    • Search 1099-R and select the jump to link to access this screen.
  2. Answer Yes to Any nondeductible Contributions to your IRA? if you had any nondeductible contributions in prior years.
  3. Answer the questions about the basis from line 14 of your 2022 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs.
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