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Why does Turbotax only ask about Roth contributions prior to 2017 when I enter a 1099R for 2017 early distribution and not include prior 2017 contributions?

Forum|Forum|7 years ago
June 4, 2019
3 replies
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I made $5500 contributions in 2016 and 2017 for a total of $11,000. I took an early distribution of 11,000 in 2017, and Turbotax shows I owe tax on $5500 because it only asks about Roth contributions made *prior to* 2017 which excludes contributions made during 2017. That is not right. I should be able withdraw early all Roth IRA contributions without paying tax and only pay tax on capital gains withdrawn early from a Roth IRA.

TurboTax Self Employed Online

Best answer by DS30

It depends -

The reason why the system is asking about prior year contributions is to determine if any of these prior contributions to your ROTH IRA are considered taxable income.

You can always withdraw contributions (but not earnings) that you made to your Roth IRA tax and penalty free at any time. Additionally, the Ordering rules for withdrawals from a Roth IRA are: first from regular contributions, then from Conversion and rollover contributions, on a first-in, first-out basis and finally from Earnings on contributions.

If you take a distribution and you have any earning on your prior year contributions, then these earnings will be considered taxable income.

To enter 2017 IRA contribution information in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "ira contributions" in the search bar then select "jump to ira contributions". TurboTax will guide you in entering this information.

To enter 1099-R information in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "1099r" in the search bar then select "jump to 1099r". TurboTax will guide you in entering this information.

When you get to the screen that titled "Enter Prior Year Roth IRA contributions", make sure you are entering the total amount of all your previous Roth contributions. So if you contributed $5,500 to your Roth IRA in prior years, you will put $5,500 in the amount box on this screen.

Please refer to IRS - Roth IRAs - Publication 590 for more information about Roth IRAs.

[edited 1/27/2018 - 11:39PM PST]

D

DS30Answer

Employee

It depends -

The reason why the system is asking about prior year contributions is to determine if any of these prior contributions to your ROTH IRA are considered taxable income.

You can always withdraw contributions (but not earnings) that you made to your Roth IRA tax and penalty free at any time. Additionally, the Ordering rules for withdrawals from a Roth IRA are: first from regular contributions, then from Conversion and rollover contributions, on a first-in, first-out basis and finally from Earnings on contributions.

If you take a distribution and you have any earning on your prior year contributions, then these earnings will be considered taxable income.

To enter 2017 IRA contribution information in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "ira contributions" in the search bar then select "jump to ira contributions". TurboTax will guide you in entering this information.

To enter 1099-R information in TurboTax, log into your tax return (for TurboTax Online sign-in, click Here and click on "Take me to my return") type "1099r" in the search bar then select "jump to 1099r". TurboTax will guide you in entering this information.

When you get to the screen that titled "Enter Prior Year Roth IRA contributions", make sure you are entering the total amount of all your previous Roth contributions. So if you contributed $5,500 to your Roth IRA in prior years, you will put $5,500 in the amount box on this screen.

Please refer to IRS - Roth IRAs - Publication 590 for more information about Roth IRAs.

[edited 1/27/2018 - 11:39PM PST]

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paul10Author

There is no rollover involved here. I made a 5,500 contribution in 2016 and in 2017 and withdrew 11,000 in 2017. Turbotax is not asking anything about 2017 contributions. It only asked about contributions prior to 2017 and taxes me on 5,500.

fanfare

Employee

contributions made in 2017 must be handled separately since they impact your 2017 Traditional IRA contribution.
You should encounter a separate question for that amount.

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paul10Author

I did not make any 2017 Traditional IRA contributions. This was all done in a Roth. 5500 in in 2016 and 2017 and 11,000 out in 2017.

Q

Qr123

Hi, did you ever work this out? I'm having the same issue now. @paul10

macuser_22

Employee

@Qr123 - Please ask your own NEW question the the "Ask a question box" with your details.

You are adding onto a 4 year old post. (The 6/4/2019 date is just the date that the old post was transferred from the old forum to this one but is not the actual date of the post).

paul's question was about *2017* tax return and many laws and TurboTax screens are very different now.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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dmertz

Employee

Roth IRA contributions made for the year of the tax return are entered separately from entering your basis in Roth IRA contributions and conversions made for years prior to the year of the tax return.