How to report a backdoor conversion from a 401K to a ROTH IRA

[SeA3106]

My client received a 1099R from her investment company showing a $100K rollover to a traditional IRA and a $20K taxable distribution to her ROTH IRA.  Should this ROTH conversion be reported on Form 8606?  The only way I could get the $20K to show up on the 8606 was to check the IRA/SEP/SIMPLE box.  Given that these funds came from a 401K, is this the correct way to enter this transaction in Lacerte?

[George4Tacks]

"Her investment company" is referring to the company her 401K is held in?

When and how much was the nondeductible IRA contribution made? 

$20K taxable distribution from what type of account? Your statement says it was from a 401k. Was it a Roth 401k?

Have you shown the IRA basis in Screen 24?

You can look at this search for some help https://proconnect.intuit.com/support/en-us/help-search?filter=Lacerte+Tax&filter=Lacerte+Tax+Planne...

NOTE: Maybe @IntuitGabi can get the 1st item listed either recovered or removed from this search. Broken links are still lingering how many years after the conversion?

[SeA3106]

"Her investment company" is referring to the company her 401K is held in? Yes!

Yes, I've shown the IRA basis in Screen 24

There were two transactions during 2021.

1. She rolled over $100k from her 401K to a Rollover IRA with an investment firm. She is retired and completed this transaction in Aug 2021

2. She did a $20K rollover from her qualified retirement plan (401K) to ROTH IRA. She had her investment company transfer $20K from her 401K to her ROTH IRA and she will pay taxes on the $20K. This transaction was completed in Dec 2021. Trying to report this transaction correctly on the tax return.  

I've contacted Lacerte help desk and I keep getting conflicting information and thought I would post here to get the correct answer. 

[qbteachmt]

"Backdoor" would be 401(k) to Trad IRA, then Trad converted to Roth. Your taxpayer had a retirement plan account, not an IRA, to Roth conversion. Are you sure that amount wasn't already his/her basis? If so, it's not taxable. You mention reporting basis, which is not usual within the 401(k) but if so, it already qualifies for Roth not as conversion. 

[George4Tacks]

What are the distribution codes on the 1099Rs?

[SeA3106]

She received one 1099R with one distribution code of 'G'. 

The diagnostic from the Lacerte software says that  'The program assumes that pensions distributions entered with distribution code "G" and a taxable amount entered in box 2a, are rollovers from qualified retirement plans to a Roth IRA.'  This is the exact situation for this client.  

[SeA3106]

This was not a backdoor conversion.  It was, as you mentioned, a retirement plan (401K) to Roth conversion.  As such, how should it be reported on the tax return?  How should it be entered into Lacerte? Just show that he $20K is taxable? Does anything have to be entered on Form 8606?