401k Distribution converted to partial Roth IRA

Aquino
Aquino Member Posts: 1 Newcomer
in Retirement Income

I received a total distribution from m 401K, I converted partial to a Roth IRA. When I enter it it keeps giving me the following message:

Double check this Form 1099-R  to make sure the amount you converted to a Roth IRA was not included in Box 2a, Taxable Amount. It usually isn't. However, if the part of your distribution that was converted to a Roth IRA was included in Box 2a of this Form 1099-R, then the taxable pension amount will be double counted. If it was included in Box 2a, go to the Retirement Income (Form 1099-R) screen and reduce the amount you entered in Box 2a of this Form 1099-R by the amount of the Roth conversion. This will make it so the Roth conversion doesn't get double counted as taxable income.

I entered the amount I kept in box 2a taxable income and in amount converted the amount I converted.

Answers

  • JanaA
    JanaA FreeTaxUSA Agent Posts: 145 image
    Hello Aquino! The message you're seeing is just a reminder to double-check your Form 1099-R. Based on what you've described, it sounds like you've already entered it correctly.

    When you take a 401(k) distribution and convert part of it to a Roth IRA, the financial institution typically reports the full gross distribution in Box 1, but only includes the amount you kept (not converted) in Box 2a as taxable. This is the correct way to report it, and it appears that's exactly what you did.

    You should be able to proceed past this message. It's simply a warning to verify your entries, not necessarily an error. The software is making sure you haven't accidentally double-counted the Roth conversion amount.

    To confirm you've entered it correctly:
    - Box 1 (Gross distribution): The total amount distributed from your 401(k)
    - Box 2a (Taxable amount): Only the portion you kept (not the amount converted to Roth)
    - Roth conversion amount: The amount you converted to the Roth IRA

    If your 1099-R shows it this way and you've entered it as described, you're all set. The Roth conversion will be properly reported as taxable income separately, and you won't have any double-counting.

Categories