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Old 02-21-2021, 11:27 AM   #21
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Originally Posted by Gumby View Post
Sorry this happened to you. I think the solution is as others have described - you'll need to file a 1040-X for each of the years where the conversion amount wasn't included in income. You can either do it yourself or get someone like H&R Block to do it.
I already got in trouble relying on a third party. I'll file the 1040-X and 8606 forms myself to ensure they are done correctly this time.
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Old 02-21-2021, 11:29 AM   #22
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Originally Posted by RunningBum View Post
This tells me you entered it correctly for 2018, but not 2019 or 2020. I did a quick run with nothing but a $30K rollover, entering a 1099-R with $30,000 on lines 1 & 2a, 2b checked, line 7 with code 2, and IRA/SEP/SIMPLE checked. My tax due was $1918. It doesn't show my return forms, or is shows it after I pay $29 which I'm not doing, so I can't say for sure it was recorded in the right place on 1040, but I'd think it would be.

EDIT: Maybe not. I don't see form 8606 listed among supported forms. I don't see a way to see my forms unless I pay their fee, so I don't know how they got my $30K income onto the 1040.

Question. On my 1099R in Box 7 labeled "distribution code" there is the number 2 and the IRS box is checked. When I look further down under "instructions for the recipient" the box 7 explanation indicates that the 2 is "early distribution , exception applies-under age 59 1/2"
Does this form know that I rolled the money into a Roth? and if so, how does it know that? thank you
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Old 02-21-2021, 11:44 AM   #23
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Question. On my 1099R in Box 7 labeled "distribution code" there is the number 2 and the IRS box is checked. When I look further down under "instructions for the recipient" the box 7 explanation indicates that the 2 is "early distribution , exception applies-under age 59 1/2"
Does this form know that I rolled the money into a Roth? and if so, how does it know that? thank you
I found this at https://twonline-20.taxwise.com/Help..._for_Box_7.htm

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Use Code 2 only if the participant has not reached age 591/2 and you know the distribution is the following.
  • A Roth IRA conversion (an IRA converted to a Roth IRA).
  • A distribution made from a qualified retirement plan or IRA because of an IRS levy under section 6331.
  • A governmental section 457(b) plan distribution that is not subject to the additional 10% tax. But see Governmental section 457(b) plans, in the IRS instructions, for information on distributions that may be subject to the 10% additional tax.
  • A distribution from a qualified retirement plan after separation from service in or after the year the participant has reached age 55.
  • A distribution from a governmental defined benefit plan to a public safety employee (as defined in section 72(t)(10)(B)) after separation from service, in or after the year the employee has reached age 50.
  • A distribution that is part of a series of substantially equal periodic payments as described in section 72(q), (t), (u), or (v).
  • A distribution that is a permissible withdrawal under an eligible automatic contribution arrangement (EACA).
  • Any other distribution subject to an exception under section 72(q), (t), (u), or (v) that is not required to be reported using Code 1, 3, or 4.
So it's either a Roth conversion or some other taxable event that is allowed (not penalized) and taxable.

Turbo Tax goes on to ask what you did with the money, one of the options being converting some or all of the money to a Roth IRA, and then they ask how much. This is how they fill out form 8606 for you.
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Old 02-21-2021, 11:46 AM   #24
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I found this at https://twonline-20.taxwise.com/Help..._for_Box_7.htm

So it's either a Roth conversion or some other taxable event that is allowed (not penalized) and taxable.

Turbo Tax goes on to ask what you did with the money, one of the options being converting some or all of the money to a Roth IRA, and then they ask how much. This is how they fill out form 8606 for you.

Thank you very much. Just realized the IRA is at Schwab and the Roth IRA is also at Schwab so thats probably how they "know" its a conversion.
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Old 02-21-2021, 11:48 AM   #25
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Question. On my 1099R in Box 7 labeled "distribution code" there is the number 2 and the IRS box is checked. When I look further down under "instructions for the recipient" the box 7 explanation indicates that the 2 is "early distribution , exception applies-under age 59 1/2"
Does this form know that I rolled the money into a Roth? and if so, how does it know that? thank you
(The "IRA/SEP/Simple" box is checked, not the "IRS" box.)

No, the 1099-R doesn't indicate that the money was converted to a Roth IRA. You have to tell the IRS that when you file your return by including form 8606. For a conversion, you will fill out Part II.
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Old 02-21-2021, 11:48 AM   #26
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I just wonder what the code will be when I am over 59 1/2?
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Old 02-21-2021, 11:49 AM   #27
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I just wonder what the code will be when I am over 59 1/2?
Looks like 7. I'll find out when I get my 2021 1099-R.

"Use Code 7: (a) for a normal distribution from a plan, including a traditional IRA, section 401(k), or section 403(b) plan, if the employee/taxpayer is at least age 59 1/2; (b) for a Roth IRA conversion if the participant is at least age 59 1/2;"
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Old 02-21-2021, 11:50 AM   #28
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(The "IRA/SEP/Simple" box is checked, not the "IRS" box.)

No, the 1099-R doesn't indicate that the money was converted to a Roth IRA. You have to tell the IRS that when you file your return by including form 8606. For a conversion, you will fill out Part II.

Yes, sorry IRA not IRS.
I sent the form to my accountant --I'm assuming he will know to include form 8606
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Old 02-21-2021, 11:53 AM   #29
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Originally Posted by RunningBum View Post
Looks like 7. I'll find out when I get my 2021 1099-R.

"Use Code 7: (a) for a normal distribution from a plan, including a traditional IRA, section 401(k), or section 403(b) plan, if the employee/taxpayer is at least age 59 1/2; (b) for a Roth IRA conversion if the participant is at least age 59 1/2;"

looks like that form 8606 that Cathy mentioned would have to be filled out too
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Old 02-21-2021, 12:05 PM   #30
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Ok here's my 2c. I'd see a CPA and have him / her do it this year & all corrections. When there's an issue the extra $$s are worth it to me. Let's me sleep easy.

I usually do it on the TurboTax link on my bank account, they download everything. But your situation isn't normal
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Old 02-21-2021, 02:38 PM   #31
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Yes, box 7 = 7 for a Roth conversion for over 59.5. IRA/SEP/SIMPLE has "X"
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