Roth contribution limits in year of Roth conversion - is turbotax wrong?

Forum|Forum|1 year ago
February 24, 2025
2 replies
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I made conversions from 403b retirement account to Roth in 2024. Prior to doing these conversions my income is small enough that I DID qualify to make a traditional Roth contribution (not doing a back-door,) and I read from multiple sources that the Roth conversion would NOT affect my income contribution limits. I believe I even got that off the IRS websitel. Now, TT if flagging my MAGI as too high and I think they are possibly wrong because they are counting the conversion as income (which it is) but not exempting it from the contribution limits which I think it is supposed to be. Most of the documentation online indicating the conversion amount affects roth contribution limits seem to be parroting the TurboTax mantra or coming directly from TT, while others say that specific type of income is not counted in Roth contribution criteria. Just posting in case someone really knows this and how to help TT understand if I am correct. I will continue searching for the IRS primary source info, but in the meantime if anyone has any more knowledge about this particular case I would really appreciate your sharing. Thank you

Best answer by dmertz

I suspect that you did an In-plan Roth Rollover (IRR) from the traditional account in the 403(b) to the designated Roth account in the 403(b), not a rollover to a Roth IRA, or at least that's what you told TurboTax. Unfortunately, IRRs are not permitted to be subtracted from AGI the same way that rollovers from an employer plan to a Roth IRA are when determining the MAGI for the purpose of a Roth IRA contribution.

dmertzAnswer

Employee

dee-2025Author

Oh, you are correct. I guess I didn't realize that in plan conversions were handled differently. Guess I am off to do a backdoor. 😞

AnnetteB6

Here is a link to the IRS worksheet for Modified Adjusted Gross Income (MAGI) calculation to determine if a Roth IRA contribution can be made: IRS Publication 590-A

The key is the amount shown on line 2 of the calculation. It states that income from the conversion of an IRA to a Roth IRA is subtracted from income. Also, income from a rollover from a qualified retirement plan to a Roth IRA is subtracted from income as well.

Taking the information from the IRS worksheet while looking at your Form 1040 and the information shared by dmertz into account, please respond back if you still feel there is an error in the TurboTax calculation and it will be further investigated.

@dee-2025

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