Question

Confused about IRA and 1099R

Forum|Forum|5 years ago
February 25, 2021
1 reply
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I just upgraded to turbo tax live premium. Spoke to Steward , great advisor. Both of us stuck on 1099R from vanguard which mentioned that Box 2a 11,700$. I tried to do backdoor roth and put after tax money into teaditional ira. And why My money is taxable? Please help

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ErnieS0

Please clarify. To fully answer your question, we would need to know the tax year of your nondeductible Traditional IRA contribution and what you mean by “tried to do a backdoor Roth.”

Did you actually complete a backdoor conversion? Or did you change your mind and withdraw your traditional IRA contribution.

To make your 1099-R withdrawal non-taxable, you need a matching “basis” of non-deductible contributions.

Type ira contributions
Click Jump to ira contributions
Select Traditional IRA. Continue
Continue until you see Any Nondeductible Contributions to [Your] IRA? Select Yes.
Enter your non-deductible contribution as Total Basis as of December 31, 2019 if you contributed for the 2019 tax year. This will make your withdrawal non-taxable.
If you made a 2020 contribution, enter it as a 2020 traditional IRA contribution. TurboTax will say your income is too high for a deduction and ask whether you want to make the contribution non-deductible.

If you have TurboTax Live, you have unlimited live support from a credentialed Enrolled Agent, CPA or Tax Attorney. Click on Live Tax Advice on your screen.

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S

siwadon2000Author

Hi, Ernie

Thank you for your answer. My situation is that I contributed 6000$ to Roth IRA in 2019 and was found that I was not supposed to do so because my compensation is too hight to do roth IRA. So around March 2020, I recharacterized it to traditional IRA. And at the end of 2020(December 2020). I contributed another 6000$ to traditional IRA and converted all money to Roth IRA. Now no money on traditional ira. I received two 1099R. One is about 6000$ seems ok because it is 0$ on box2a and code on box7 is R (recharacterized ) But the other 1099R is 11700$ and box2a is 11700$ as well. It is checked on taxable not determined. And code on box 7 is 2.

I read on the internet. They mentioned that I need to let my CPA know and they mentioned about form 8606 and 1040.
Please advise

DaveF1006

Actually the code 2 represents that this is a early distribution but an exception applies. The $11,700 is subject to normal taxation but you will not not be charged an additional 10% early withdrawal penalty because of the exception.

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