TurboTax won't populate Form 8606 Line 24 (Basis for rollover)

Forum|Forum|1 year ago
February 23, 2025
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In 2024 I did a rollover of after-tax contributions from my 401K to a new Roth IRA. Several months later I took a distribution from this Roth IRA for an amount that was about 25% of the rolled over amount. I got two 1099-R forms for 2024. One was for the rollover of after-tax 401K contributions which show on Line 5 in the 1099-R. The 2nd 1099-R showed the Roth IRA distribution with a Box 7 code of T.

TurboTax has my 2024 Roth IRA distribution as a taxable amount. It will not populate Form 8606 Line 24 with what I believe to be the basis from my rollover. So this basis does NOT get subtracted from the distribution amount in Part III of Form 8606.

I am convinced by reading IRS docs, that my distribution, although non-qualified, is NOT taxable. Is there a bug in TurboTax?

TurboTax Deluxe Online

Best answer by dmertz

Thanks for your reply.

When I do what you suggest and answer NO instead of Yes to the question:

Did you move this money from a 401(k) to a Roth 401(k)?"

and answer Yes to the question of having moved the money to a Roth IRA,

Then TurboTax takes the amount in my Code 'G' 1099-R Box 1 and puts that in Form 8606 Line 24. This makes my Roth IRA non-qualified distribution NOT taxable. BUT, that Box 1 amount less Box 5 ends up as a taxable amount on Form 1040 Line 5b. TurboTax acts like the Box 1 amount was converted to a Roth IRA which is NOT the case. My Box 1 amount less the Box 5 amount was rolled over to a traditional IRA.

So this isn't working correctly for me either.

I see. When a code-G From 1099-R reports distributions where some when to a traditional IRA and some went to a Roth IRA, limitations in TurboTax require you to split the Form 1099-R into two, one for the portion rolled over to the Roth IRA (the box 5 amount from the original entered in boxes 1 and 5) and the other for the portion rolled over to the traditional IRA (the box 1 amount minus the box 5 amount in box 1 and zeros in boxes 2a and 5).

dmertz

Employee

What is the code in box 7 of the Form 1099-R from the 401(k)?

If the amount in box 1 is greater than the amount in box 5, is the difference shown in box 2a?

When entering this Form 1099-R into TurboTax, did you explicitly indicate that this distribution was rolled over to a Roth IRA (and not to a designated Roth account in the 401(k)?

Astro_PatriotAuthor

The code in Box 7 for the rollover 1099-R is G. The amount in Box 1 is much larger than Box 5. This is because later in 2024, I rolled all of my pre-tax 401K contributions into a new Traditional IRA. Box 2a has a value of 0.

If I answer 'yes' to the TurboTax question:

Did you move this money from a 401(k) to a Roth 401(k)?"

then later TurboTax asks me:

Did you make after-tax contributions to a 401(k), 403(b), or 457(b) plan?

to which I answer yes, and give the full after-tax rollover amount.

But neither Form 8606 Line 22 nor Line 24 get populated by TurboTax.

If I don't answer yes to the first question above, then the rollover amount is never asked about by TurboTax.

Astro_PatriotAuthor

Also, to a later TurboTax statement of:

Enter Prior Year Roth IRA Contributions

if I enter my after-tax roll over amount to the prompt: Roth IRA Contributions prior to 2024

then my non-qualified distribution becomes not taxable because TurboTax then populates Form 8606 Line 22 which gets subtracted from my distribution.

But I don't think this is the correct thing to do in my case, since I didn't have a Roth IRA until 2024. But I did make several years of after-tax contributions to my old 401K.