401K Rollover to Roth IRA/MA taxes?
First, thank you to Alan-Oniras and Mendax68 for your replies to my previous post “Forms 1040/8606 with a 401K Rollover to Roth IRA.”
Another question: As a Massachusetts resident, is this 401K Rollover to a Roth IRA a taxable event in 2009 on my MA return? Schedule X-Other Income. line 2 refers to Taxable IRA/Keogh and Roth IRA conversion distributions but not sure if they mean the total amount I converted from the 401K or funds distributed to me from the Roth IRA when I start taking distributions from the Roth IRA plan at some time in the future. I don’t want to incorrectly list the Rollover as income and then pay taxes again when I start taking distributions.
I thought this Rollover was a Federal and State taxable event but now I’m not sure. Does Massachusetts treat Roth IRA accounts the same as a Traditional IRA? You pay state income taxes when you withdraw the funds from the account, so there are really no MA tax benefits whether one has a Roth or a Traditional IRA. Not sure….just asking??
My accountant doesn’t know the answer and claims if he enters the amount of the 401K rollover to the Roth IRA on Line 16B, which I asked him to do (subject of my previous post), his software program kicks the Rollover amount to my MA return on Form 1, Line 4 Taxable Pensions and Annuities.
Any thoughts? Thanks very much.
Judy
Permalink Submitted by Alan Spross on Wed, 2010-04-07 02:24
I just took a cursory glance at the MA instructions, and this is the first time for MA, so take this with a grain of salt.
However, it appears that this is not a Sch X IRA distribution, therefore a line 4 distribution that would be taxable in MA in the same manner as the federal return on line 16b would be correct.
Sch X reflects IRA distributions under which there was no deduction in MA when contributed, so basis is recovered first in a distribution or conversion to a Roth IRA. This does not apply to 401k fund contributions when you made them, as I am sure they were pre tax for you on both your federal and MA returns.
Your Roth IRA will be treated the same in MA as it is for the federal, so you should not be taxed in MA under current law if you will not be taxed on Form 8606 on the federal return.
Permalink Submitted by Larry Sochrin on Thu, 2012-03-22 15:19
Sticking with the MA taxes and Schedule X, they talk about Taxable IRA/Keogh and Roth conversions. Should I also be including 1.) Roth contributions that weren’t from a conversion and 2.) money that was rolled into my Traditional IRA from a SEP-IRA? (On the latter, they were actually both at the same firm, so they just consolidated the SEP and the Traditional IRA money into the Traditional account at some point.)