Question

Mega Backdoor Roth as Total Income

Forum|Forum|6 years ago
February 17, 2020
2 replies
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I need help properly entering in the amounts around using the Mega Backdoor Roth that my 401k plan and employer enable. This has been done automatically with Vanguard.

Let's say I've contributed $10k using the mega Backdoor Roth. On my 1099-R, it shows up and I enter it into TurboTax. The money used for this contribution, since it's a Roth, comes from my W2 income. However, when I finish up the Personal Income section, it shows that my total income is my W2 + the $10k, which is not correct. That $10k from the 1099-R shows up as "pensions - nontaxable" so it's fine from a taxation perspective, but not correct from a total income perspective.

Is this all correcT?

P

pk12_2

Employee

@dmertz , can you help ?

D

dmertz

Employee

Both are indeed part of your total income as defined in the tax code, it's just that the rollover from the Roth 401(k) to the Roth IRA is nontaxable income. Other than to be included on Form 1040 line 4c, the nontaxable income has no effect on your tax return or anything else.

R

robochenAuthor

@dmertz

Understood, but I believe Turbo Tax is double counting when I get to the "Total Income" page after finishing Personal Income. I don't think there is a tax implication, but this at minimum feels like a bug.

Just to be explicit, on my W2, let's say my gross wages are $100k and my after-tax 401k is $20k and is bucketed in the "Deductions" category. On the "Total Income" summary page, "Wages and Salaries" read $100k and "Pensions - nontaxable" read $20k. "Total Income" reads $120k.