Megabackdoor Roth

[Dom_Nick]

Taxpayer works in a tech company and made after-tax 401k contribution to the traditional 401K account and rollover the after-tax portion to the designated Roth 401K account through the in-plan conversion. Under the Income Section > Pensions, IRAs (1099-R) > Rollovers, do I need to to check the box "Rollover of non-designated Roth account to designated roth account”? What does this check box suppose to do?

[rbynaker]

There are not a lot of PTO experts on here.  Maybe George will pop by but he has too many usernames for me to remember to tag the right one. 🙂

That said, sounds like that's the box I would check.  Most of the tech MegaBackDoorRoths I see now have automatic conversion turned on.  So the Box 1 and Box 5 are the same, no tax, just reported on 1040 5a with nothing taxable.  Before that there would sometimes be timing differences between contribution and conversion resulting a tiny taxable income amount.

[George4Tacks]

https://www.irs.gov/retirement-plans/rollovers-of-after-tax-contributions-in-retirement-plans#:~:tex....

What are the codes on the 1099R?

Which boxes have amounts?

Lacerte (the pricier PCT) has a nice feature. Press F1 at an input area and you get HELP!! Here is the help for that check box:

1 If Rollover of Non-Designated Roth Account to Designated Roth Account

Rollovers

Screen 13; Code 364

Select the box (or enter 1) if this distribution is a rollover (either direct or indirect) from the taxpayer’s non-designated Roth 401(k) or 403(b) account to the taxpayer’s designated Roth 401(k) or 403(b) account.

Here is a link to more articles on dealing with 1099R in PCT https://proconnect.intuit.com/support/en-us/help-search?document_type=Articles&filter=ProConnect+Tax...

The Small Business Jobs Act of 2010 permits employers to amend their 401(k) or 403(b) plans to allow participants to transfer an eligible rollover distribution (ERD) into their designated Roth account in the plan if the transfer is of an ERD:

1. Made after September 27, 2010;
2. From a non-designated Roth account in the same plan;
3. Because of an event that triggers an ERD from the plan, and
4. Otherwise meets the rollover requirements.

If a participant rolls over an ERD into a designated Roth account, he or she must include any previously untaxed portion of the ERD in gross income (generally, the amount from box 2a of Form 1099R). However, the rolled over amount is not subject to the additional 10% early withdrawal tax.

Here is a link to more PCT articles about 1099Rs: https://proconnect.intuit.com/support/en-us/help-search?document_type=Articles&filter=ProConnect+Tax...

[Dom_Nick]

Hi George,

Thank you for your response. The Codes on the 1099R is G. Box 1 and Box 5 have the same amount. It seems like the non designated roth account to designated roth account box should be checked for a in plan rollover. Please confirm if my understanding is correct.

[George4Tacks]

I believe your understanding to be correct. I don't see where that information shows on the return. The only info I do see is in General Information a statement of Taxpayer Roth Conversion/Rollover Basis.