Your TIRA custodian will likely issue 2 1099-R, because the 2 transactions don't share the same distribution code in Box 7.I am planning to rollover after-tax contribution from 401k to Roth IRA (mega backdoor Roth). Since these after-tax contributions sat in 401k for several years, they have earnings attached to them which I will rollover to traditional IRA. I am terrified of messing this up and hence need some confirmation on the different steps involved.
Step 1a: Rollover 401k after-tax contributions to a personal Roth account.
Step 1b: Rollover earnings related to 401k after-tax contributions to a traditional IRA.
Step 2 : Rollover funds from above traditional IRA to 401k from step 1a.
My main question is on step 2. I have already used this Traditional IRA account for regular backdoor Roth this year. Currently balance is zero in this IRA account. Can I use this same account for step 1b and step 2 or is it better to use a different IRA account? If I use same account, do I get one 1099-R or two (1 for backdoor process and second for mega backdoor process).
All the accounts involved in this process are at Fidelity.
Your BDR will likely get Code 7- "Normal Distribution," while the reverse rollover back to 401k will likely be assigned Code G- "Direct rollover of a distribution to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA."
Note that your 401k custodian will also issue 2x 1099-Rs for the Mega BDR rollover, 1 for Roth money (Code H) & 1 for pre-tax earnings (Code G).
Statistics: Posted by Navillus1968 — Tue Jan 30, 2024 10:07 am — Replies 3 — Views 196
