how do you run "what if " scenarion for 401K pretax to 401K roth conversion?

Forum|Forum|2 years ago
April 2, 2024
2 replies
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I am 51 and want to convert pretax 401K to roth side (401K or Roth IRA) whenever possible. I tried to add 10000 for distribution under 1099-R entries (retirement plans and social security-> IRA,401K, Pension), it says it is not taxable. No matter what I add, It shows it's not taxable. is it anyway correct?. it's the pretax 401K I have been contribution for years and I feel I have too much pretax and want to convert to ROTH

I am trying to find out what kind of tax I will be owing by converting.

Plese advise me how I can do this...

I filled up

1. 10K

2a. 10K

2b check both

7-2 early distribution except Roth IRA), checked IRA?SEP/SIMPLE box

Best answer by SteamTrain

@nutellawoo

You probably know this, but it has to be said, just in case.....Make sure you are using a second "Copy" of your 2023 file to mess around predicting next year's stuff (Assuming you are using Desktop software)

1) Probably neither of the 2b checkboxes would be checked.

2) The IRA/SEP/Simple box is not checked, because the $$ are not coming FROM that type of account.

3) IF it is a direct transfer (i.e. you do not receive a check...but it goes directly) box 7 is a G.

4) As you step thru the follow-up questions AFTER the main form, one question will ask if the $$ went into a ROTH 401k or ROTH 403b...you need to select that. Then the $$ should show up as being taxed.

SteamTrainAnswer

Employee

@nutellawoo

1) Probably neither of the 2b checkboxes would be checked.

2) The IRA/SEP/Simple box is not checked, because the $$ are not coming FROM that type of account.

3) IF it is a direct transfer (i.e. you do not receive a check...but it goes directly) box 7 is a G.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

dmertz

Employee

Then, as SteamTrain indicated, the Form 1099-R that you entered is incorrect. a 401(k) is not and IRA. The Form 1099-R should be:

Box 1: $10,000

Box 2a: $10,000

Box 2b: Both UNmarked

Box 7: Code G

IRA/SEP/SIMPLE box: UNmarked

For an In-plan Roth Rollover: answer Yes when asked if you moved the funds to a Roth 401(k) or Roth 403(b)
For a rollover to a Roth IRA: answer Yes to the question that asks if you moved the funds to a Roth IRA.

If moving the funds to a Roth IRA, you usually want to make sure that the rollover is a direct rollover to avoid mandatory tax withholding. If taxes are withheld, the withholding represents an amount distributed to you and you would have to use funds from another source to complete an indirect rollover of the amount withheld.