Just post your question here, with as much detail as possible.

And you might want to remove your phone number and email address.  Spam-bots search websites to 'grab' such things to for purposes of selling you something and/or try to scam you with something.

Please remove your personal information, nobody here will call you, and any stranger will have access to your phone or email and bombard you with spam and junk.

Thank you for the advice. will do asap. Mo

Appreciate your advice, will do asap. Mo

Hi Lisa, 

I am trying to remove my personal infos but I couldn't find the way you do it. could you please provide me with the step to do it, or to remove the whole text. Mo thanks

Click the 3 dots n the corner of your post and choose Edit

Will need the dates your client made the transactions. the process is, he will make a contribution to a nondeductible traditionally IRA (to give him a basis) He will receive a 1099R for taking from the traditional IRA and Recharacterizing to a ROTH. Keep in mind that if he already has a nondeductible traditional IRA it will not give him the outcome he thinks. 

Conversion and Recharacterized are two different things. Did your taxpayer do Both?

Putting (contributing) post-tax funds (nondeductible contribution) into a Traditional IRA and then moving that to Roth is called "backdoor" and is a conversion. It's a way to fund Roth when they don't qualify directly. This second step (the move to Roth) is not a Contribution, because it's the second step.

Recharacterize is when something is contributed, then the nature of that contribution needs to be corrected or changed. An example is putting a nondeductible contribution into Roth, then realizing you don't qualify, so you have it corrected by putting it as nondeductible Traditional IRA. It's still a contribution.

Form 5498 is evidence for money In.

Form 1099-R is evidence for money Out.

"I got 5498 Form that shows Recharacterized contribution amount $6,000"

From which type of account to which type of account?

"and then another 5498 form that shows Roth IRA conversion with the same amount $6,000."

The same amount, or is this is exact same funds?

In other words, did they:

1. Made a Roth contribution

2. Discovered they didn't qualify

3. Recharacterized that to Trad nondeductible IRA contribution

4. Backdoor Roth conversion

Because, as is pointed out, you also need to know if there is any other Trad IRA/SEP/SIMPLE IRA money or was this the only money, and they did a full Roth conversion of all funds not already in Roth? You are going to determine if this is a pro rata conversion (some is taxable, some is not).

It would be very difficult to give you a step by step guide to enter a back door Roth in ProSeries. First you must have a good understanding of what a backdoor Roth is, and why people do them. You must know if client has any traditionally Ira's anywhere, and also if he has a basis in any of them. You start the process by entering the 1099R that he will receive, and fill out the 1099R worksheet. Be sure and go all the way down the worksheet to the bottom, answering all questions that apply. Keep filling all necessary worksheets until you get the answer on the 1040 line 4b that you expect. If he has NO traditionally Ira's any where except the one he contributed to and recharacterized. you would expect 1040 line 4b to be "0" if he has other Trad. Ira's it will not be "0"  

As far as I know Backdoor Roth is used by taxpayer to avoid the Income limit the IRS has on contributing to it, so they contribute to the Trad and right the way convert it to the Roth this way they are not limited by that $240,000 limit for MFJ. That is all I know.

So I wonder if this is something you can help with, working on it remotely, and of course you tell what your fees will be.

Thanks

Mo

The same amount, or is this is exact same funds? answer: same funds

if there is any other Trad IRA/SEP/SIMPLE IRA money or was this the only money, and they did a full Roth conversion of all funds not already in Roth? asnwer: Basically, every year they contribute to Traditional him and his wife then go back and convert it to ROTH IRA because they don't qualify based on their income.

Form 1099-R is evidence for money Out: question: does anytime you contribute to Traditional IRA and convert it to the ROTH IRA -like in my case- you are supposed to receive a 1099-R Form for that or that something that investement companies can skip?

It sounds like your clients do not have any other Trad. IRA's. But you need to ask to make sure. If it is true they have no other Trad. Ira's, then you will expect for the line 4b on the 1040 to be zero. like I said earlier you just start with the 1099R worksheet, and fill out completely answering all questions that pertain to your clients. When I do them (not very many) I wind up going back and forth a few times until I get the answer I want on the 1040. Note there will always be a 1099R

Hi,

Can someone contribute to prior year Nondeductible IRA and convert it to Roth IRA before April 15?

Would I have to create in his 2024 return 1099R with Distribution Code G?

Even if I don't have  1099R?

Then select box B4 Full amount rolled over to Roth IRA and put the amount contributed on line B8 Preciously taxed contribution?

@Romanh 

"Can someone contribute to prior year Nondeductible IRA"

Let's separate these parts: Until the filing due date of the tax return, you can make an IRA contribution for that prior tax year. You might have limitations due to high AGI or being covered by a retirement plan at work and therefor be ineligible for contributing to Roth IRA directly. You might also be limited for being able to deduct your contribution to your Trad IRA, but you still might be eligible to contribution to a Trad IRA as a nondeductible (Basis) contribution.

"and convert it to Roth IRA before April 15?"

April has nothing to do with conversions. That’s a contribution deadline. Conversions and rollovers are actions not using new money. The contribution in a backdoor is when it went into the Trad IRA, not when it moved to Roth IRA.

Conversions are reported for the tax year of the date that action occurred. It is an event that happened for the year it was done in. You get a 1099-R for the money Out, as a conversion is first of all, a distribution. The issuer might not know what you did with it other than, it was removed from an IRA account.

"Would I have to create in his 2024 return 1099R with Distribution Code G?"

Code G might be taxable or not taxable. What matters is, was the money moved from one sheltered type to a similar one (such as Trad IRA to plan 401(k)) or a different one (Roth IRA from Trad 401(k)), and was there Basis or commingled funds. Remember, the issuer of the 1099-R only concerns their reporting for the money Out. Not for what happened next, or if there are commingled funds, or if there is Basis.

G: Direct rollover of a distribution to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA. You need to know which action was taken next. That doesn’t seem like a backdoor Roth.

"Even if I don't have 1099R?"

Is that what he got, for tax year 2024? Or was the conversion done in 2025? You don’t make up a 1099-R. And a backdoor Roth IRA conversion only works if there are no pre-tax, deducted, funds in Trad IRA, SEP IRA or SIMPLE IRA. If the ending FMV of these accounts, aggregated, is other than $0, this will be a pro rata taxable conversion.

You get a 1099-R for money Out, for the event that happened in the tax year. If a backdoor is contributed in 2025 as a tax year 2024 contribution, then converted, the conversion (and 1099-R) are all in 2025. The Form 5498 for the initial contribution will be out in May and it should have been marked as for tax year 2024. Form 5498 is for money In. Your tax filing likely needs to include Form 8606 in both years.

"Then select box B4 Full amount rolled over to Roth IRA and put the amount contributed on line B8 Preciously taxed contribution?"

A Rollover is not the same as a Conversion. Which is it? Yes, a previously taxed contribution is Basis.

Are you using the 1099-R worksheet in ProSeries? Do you have a conversion, a rollover, a backdoor conversion, are you trying to report something in the wrong tax year?

Thank You Very much for getting back to me!!

He will actually contribute to Nondeductible IRA for 2024 and do conversion week later to Roth IRA which will be in 2025 therefore will receive 1099R in 2025. I will report the conversion in 2025.