401K rollover split between Roth and traditional IRA

Forum|Forum|2 years ago
March 18, 2024
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Hi, Some years ago, I put some after-tax money into a traditional 401K and I decided to roll that over to my Roth IRA this year. Administrator was required to distribute the untaxed growth along with the after-tax contributions. I received one itemized check and deposited the after tax money in my Roth IRA and the untaxed money into my Traditional IRA. I received one 1099, showing the gross distribution and the portion that was the (after-tax) employee contribution.

The TT tax questionnaire asks me if I rolled the distribution into a Roth IRA, yes or no. There is no option to indicate that it went to two different sorts of accounts. The chatbot tells me to enter the two amounts on separate 1099's, but I only received ONE 1099 and I don't think I should make up different numbers and make up a new form.

How can I get this information entered correctly?
Thanks!

TurboTax Premier Online

Best answer by dmertz

You are correct that the Form 1099-R needs to be split, but there is no need to enter these as substitute Forms 1099-R. Just enter them as regular Forms 1099-R without explanation. With no tax withholding, the details of the Forms 1099-R that you enter are not included in your e-filing, so the split necessary to accommodate TurboTax will be invisible to the IRS.

lilli2Author

Have I stumped the community? I guess so.

In the end, I created two substitute 1099-R forms to split the distribution into parts, and explained myself using a Form 4852 for each. Let's hope it works.

dmertzAnswer

Employee

DH21

Hello, this answer was helpful as I rolled over a 401k from Fidelity where 95% went into a Rollover IRA and 5% of after-tax contributions went into a newly-created Roth IRA. My AGI for 2023 is over the limit for any Roth contributions, so my initial pass through TT assessed a penalty of 6% for an ineligible Roth contribution. If I do as you recommend, and enter two 1099-Rs into TT (one where the 5% of the proceeds go into Roth and one where 95% of the proceeds got into a standard Rollover IRA), will TT magically recognize this as a tax-free, penalty-free Roth contribution and not assess the penalty? THANK YOU!!