Entering A Backdoor Roth in ProSeries for Immediate Contribution and Withdrawal

[tccpg289]

Let's assume the taxpayer contributes to an IRA with the intention of a backdoor Roth.

The contribution is immediately converted, thus a 1099-R is issued.

What are the mechanics in ProSeries to ensure this is captured properly? Does it get entered on the traditional IRA deduction screen, and then on the 1099-R screen (deductible and taxable), or is there a method to enter it so that it is non-deductible and non-taxable? Does the code on the 1099-R dicate how this is all entered?

[Terry53029]

Just fill out the 1099R work sheet, and if box 7 is code 2 your good to go. Scroll down to rollovers and recharacterizations, and check the box on line B5. if it is other than code 2 you may have to play with the program to get it to work the way you want

[Accountant-Man]

You have to enter the Traditional IRA contribution that is then determined to be non-deductible on. It then goes on 8606 to report basis. Otherwise you have no basis.

Then check the box on 1099-R to show conversion of 100%.

[qbteachmt]

"The contribution is immediately converted, thus a 1099-R is issued."

If the contribution is for 2023, the 1099-R will be from 2024 with code P = previous year.

"Does it get entered on the traditional IRA deduction screen, and then on the 1099-R screen"

Yes.

"(deductible and taxable)"

No. It should be nondeductible, so that the conversion is nontaxable.

"or is there a method to enter it so that it is non-deductible and non-taxable? Does the code on the 1099-R dicate how this is all entered?"

Yes.

Also, there should be no other Trad IRA, SIMPLE IRA or SEP IRA funds. The "backdoor" reference is for nondeductible funds that are converted so quickly, there is no even any growth, gain or earnings on it. It's all Basis. Otherwise, your taxpayer risks a pro rata taxable conversion.

The 1099 worksheet will trigger Form 8606.