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Solved

Moving money from IRA into Roth

Forum|Forum|2 years ago
March 21, 2024
2 replies
0 views

Hi,

I moved $45K from my IRA to establish a Roth IRA. I entered the Roth IRA contribution in Turbotax Premier, and could not find a place to indicate this was from an IRA to Roth conversion. Turbotax shows an excess contribution of $37K+ based on max contribution of $6,500, with $2K+ penalty. As I understand it, this is an IRA to Roth conversion and should not be penalized. Is there a place for me to indicate the Roth IRA contribution was from an IRA, and will this remove the penalty from my return?

Thank you,

Brad

Best answer by VolvoGirl

I did not expect to be penalized for an excess contribution to the Roth by moving funds from the IRA to the Roth. Is a conversion from a traditional IRA exempt from the max annual contribution of $6,500?

Thanks,

Brad

A conversion or rollover is NOT a new contribution. Do not enter it under deductions! Only enter the 1099R. Nowhere else.

Employee

If you did a conversion you should have received a 1099-R. What was the code in Box 7?

TennisBrad1Author

Box 7 had the code 7 in it.

Thanks!

Employee

If you put the funds into the Roth within 60 days follow the directions already provided.

In the screens after the data entry of the 1099-R, you will (eventually) see a screen like this:

So, first, tell TurboTax that you moved this money into another retirement account.

Then say that you did a combination of rolling over, converting, or cashing out the money.

Then enter the amount converted to the Roth IRA.

Let us know if this does not work for you.

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TennisBrad1Author

Thanks for the quick response. I had already done exactly as you suggested:

- Moved the money to another retirement account

- Did combination of rolling over, converting, or cashing out

- Total amount converted to Roth IRA

It appears Turbotax did not link withdrawal from IRA to contribution to Roth. Any suggestions on workaround?

Thank you,

Brad

The IRA distribution of $45,000 was taxed in line 4a (1040), and the Roth contribution shows up on the IRA Info Worksheet as a Roth IRA conversion.

What did you expect to happen?

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