2020 TurboTax 8606 problem

[engr]

hello,

I have been making monthly withdrawals from a vanguard account that was rolled over from my company’s 401k account a few years ago. This December I decided to perform a Roth conversion (20k) from the same account .My intent was to reduce the Rmd amount when I turn 72 ( I’m presently 67).

I already have a Roth account established (current basis equals zero).

I received my vanguard 1099r. It shows the monthly distributions and the single 20k withdrawal for the Roth conversion.

TurboTax states that it will automatically generate the 8606 form if it detects a conversion. (Part 2 only of the 8606).

I did not notice an 8606 form generated after I asked TurboTax to check my federal and PA state returns with no errors.

I went to TurboTax forms and selected 8606-T form. I thought I could enter part 2 data manually since it’s only 3 lines. However, when I tried to enter 20k on line 16 (I think) TurboTax would not allow me to enter any data. It said there may be an issue with entry of the info on the 1099r form.

I did not see an error in my data entry.

I’m thinking I could enter the 20k for the Roth conversion on a separate 1099r entry on TurboTax in order to separate the monthly distributions from the Roth conversion amount but I feel like this should not be necessary.

TurboTax has to be able to discriminate withdraws for Roth conversions from the other ordinary income withdrawals in order to know it needs to generate the 8606 form but I don’t see where that point is

I would appreciate any suggestions. Thanks.

 

[target2019]

Go to the 1099-R form and look for Rollovers, Roth Conversions, Roth Rollovers and Recharecterizations.

Can't advise on specifics after that. I only have conversion money, so I checked the box B5 for that. I know you don't check that for sure.

 

[fh2000]

My understanding is that 8606 form is for "Nondeductible IRA accounts".

From Google:
"Use Form 8606 to report: Nondeductible contributions you made to traditional IRAs. Distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs. Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs."

I did 2 Roth conversions last year: one from a nondeductible IRA, and one from Vanguard 401K.

After running Turbotax, a 8606 form was generated with the amount from my nondeductible IRA conversion. The amount from 401K conversion is not included in 8606 form, though Turbotax did include all of 401K conversion in taxable amount.

Did your Roth conversion involve Nondeductible IRA accounts?

 

[JoeWras]

Don't enter it manually on the forms.

You probably missed a question or answered it wrong.

1) On the 1099-R entry, make sure you answered BOX 7 correctly and put in the correct code.

2) It is very important you answer the followup questions on the succeeding pages and not just blow through them.
- "Inherit?": NO
- "What did you do with the money from <your company>?"
. You moved it to another account
. You did a combination of rolling over, converting or cash out.

That last answer could be wrong because if you answered "I rolled it over to another IRA or returned it to the same account", things will go wrong.

It is tempting to answer that way since you are 'sort of' rolling it over. No you are not. You are converting.

And here's the rub, TurboTax asks if you did a "combination". Well, that applies even if you didn't do a combination. If you converted it all, still check that box. Then enter the amount converted (which is all of your 20k, but not including your other distributions).

 

[cathy63]

TurboTax is currently having problems with 8606s for Roth Conversions. They expect to fix it by March 5.

https://ttlc.intuit.com/community/r...as-an-inherited-ira/01/1996989/highlight/true

 

[JoeWras]

YIKES! Glad I'm waiting. Mine appears calculated correctly. I still think OP should check the questions.

 

[cathy63]

YIKES! Glad I'm waiting. Mine appears calculated correctly. I still think OP should check the questions.

Oh definitely a good idea to verify the inputs! I just wanted to point out that even if you enter the correct data the return can come out wrong until the bug is fixed.

From what I understand, the program will let you e-file even if the 8606 is wrong, but since some were rejected by the Feds, TTax is now holding those returns until the bug is fixed. I'm not clear on whether people who have incorrect 8606s will have to resubmit or if Intuit will be able to fix it entirely on their end. It seems like this bug may have been introduced with a recent update, so earlier returns were probably fine.

At times like this, I'm just as glad to be waiting for my corrected 1099s. Knowing they always come in mid-March keeps me from filing early and getting caught by these bugs. I have done a couple of returns for family members that don't have 8606s though, and those were fine.

 

[engr]

I found my mistake — operator error
When inputting my 1099r data I made a mistake on answering the questions following my input as stated my several members.

My thanks to all who participated !!

 

[braumeister]

When I used to give exams in a classroom I always began, before passing out the tests, by going to the board and writing in very large letters:
RTFQ


It never seemed to help.

But kudos to you for admitting the error.