Entering a Roth IRA distribution on Form 8606 Part III in Lacerte

This article explains how to report a Roth IRA distribution in Part III of Form 8606.

Follow these steps to enter a Roth IRA distribution:

1. Go to Screen 13.1, Pensions, IRAs.
2. Select the Form 1099-R section on the left-hand side of your screen and fill in the applicable information.
3. Enter the full distribution in Gross Distribution.
4. In the Distribution Code #1 field, select J, Q, or T (whichever is shown on Form 1099-R, box 7) from the dropdown menu.
   • If the distribution is a non-qualified Roth IRA distribution (distribution code J or T) and the input for (2A) Taxable Amount (Code 4) is left blank, Lacerte uses the entered gross amount to determine the taxable amount on Form 8606, page 2.
     • In determining the taxable amount, Lacerte offsets the gross distribution by any Roth contribution or conversion basis entered on Screen 24, Adjustments to Income.
   • If the distribution is a qualified Roth IRA distribution (distribution code Q), the distribution isn't taxed.
   • However, if a taxable amount is entered for a qualified Roth IRA distribution, the program will carry it to Form 8606.