Thanks for the further explanation of the TaxAct worksheet. If the amount in Box 1 is added to taxable income, are you sure that the IRA/SEP/SIMPLE box in box 7 was not checked when the 1099R was entered to a tax program? It should not be checked.Just a clarification that the reference to form 8606 in taxact is an administrative/software one. It's simply the section/location where they reconcile all the various rollovers/conversions etc. For this situation, no entries actually get put on form 8606. E.g. if there are multiple 1099s each reporting a different transaction (Roth conversions, 401k rollover to IRA, in-plan Roth conversions, etc) the entries get clarified on what is essentially an internal worksheet that just happens to live on the same page as the 8606 form within taxact. It's also the "worksheet" where can separate the basis of in-plan conversions and rollovers to a Roth IRA which occur in the same year for example.Referring to Form 8606 when reporting qualified plan rollovers to Roth IRAs is also an error by TaxAct.
But if the 1099 is incorrect, that's a different issue entirely.
But I have a related question. If one WERE to do a rollover of pre-tax amounts to a Roth IRA and ALSO do an in-plan conversion in the same year. Would that ever be reported on one single 1099-R? And if yes, it seems like that section of the 8606 "worksheet" is where one would break out the two. Because it asks separately for 1) the basis on the entire rollover+in-plan conversion and then separately for the taxable portion of the in-plan conversion. Presumably because that granularity can't be found on the 1099-R?
Edited to add: It seems TaxAct ignores the entries in Box 2a or Box 5 when there is a code G. The amount in Box 1 is always added to taxable income unless one enters a basis in a separate location (i.e. it doesn't pull or account for the values you may enter in Box 2a or 5). However, I can't get the Q&A to come up with the correct output as it never asks for the basis (nor pulls from the 1099). One has to "know" where to go. Hmm. Not user friendly especially if one doesn't actually know what the output is supposed to be in the first place.
With respect to 1099R issuance, despite distributions going to different types of accounts, if the Box 7 coding is the same they will typically be combined on a single 1099R form, but boxes 2a and 5 are only filled if the destination account is a Roth account, and in that case the sum of 2a and 5 should be the same as Box 1. If the issuer assumes that the direct rollover went to a TIRA as is the case for most direct rollovers, 2a will be 0 and 5 will be blank.
Statistics: Posted by Alan S. — Sat Mar 02, 2024 5:26 pm — Replies 40 — Views 3495