Roth conversion 1099-R reporting
What is the proper code for box 7 on a 1099-R for a traditional IRA conversion into a Roth IRA? Should the IRA/SEP/SIMPLE box be checked? I did a Roth conversion in 2009. The only other meaningful income I had for the year was income from my employer for which normal withholding was performed. I completed my tax return and the software is calculating a penalty for underpayment. Box 7 has distribution code “1” marked and the IRA/SEP/SIMPLE box is checked. No other notations are on the form. Is this correct?
Permalink Submitted by Alan Spross on Tue, 2010-02-02 21:40
Code 2 should apply if a direct transfer is made to a Roth IRA prior to 59.5. Code 7 applies after 59.5.
But the TIRA custodian may issue a distribution to the IRA owner who then rolls it by indirect rollover to a Roth IRA. In this case, the TIRA custodian does not know about the conversion and will use Code 1 prior to 59.5. Reporting the Roth conversion on Form 8606 and line 15b should take care of any early withdrawal penalty since it does not apply to Roth conversions. There should be no need to correct the coding on Form 5329. The IRA/SEP/SIMPLE Box should be checked since the distribution is from a TIRA.
Did you tax software produce an 8606 to report the conversion? If it did, and you still have a penalty, then you may need a 5329 to override the penalty. FIrst make sure you are getting an 8606 to report the conversion to see if that does away with the penalty.
Permalink Submitted by Ken Winger on Wed, 2022-11-16 00:31
1. What is code on 1099-R – Box 7 – S/B 7 correct? 2. What is code on 1099-R – Box 7 – S/B 7 correct if for PARTIAL CONVERSION?
Permalink Submitted by Alan - IRA critic on Wed, 2022-11-16 01:00
There are 3 possibilities. For under age 59.5 if distribution is made to taxpayer and then rolled by taxpayer to a Roth – Code 1; But if directly transferred to a Roth IRA Code 2; For over age 59.5, Code 7. These code apply regardless of whether the conversion is partial or full.