Roth IRA conversion from IRA and 1099R

Submitted by abraham boznick on Mon, 2019-12-16 07:19

I have a regular IRA account and need to see how much money to convert to ROTH IRA by end of 2019 to minimize my taxes for 2019. I obviously do not have 1099R form yet, but in order to to do a dry run in my H&R block tax software to minimize taxes I need to enter the information into the software that would show up in 1099R form that would be issued in early 2020. I am over 59.5 years old and retired. Would it be possible to let me know how all the boxes in 1099R would look like for the Roth IRA conversion in my situation.



Submitted by David Mertz on Mon, 2019-12-16 12:53

  • [Corrected]
  • It looks like a Form 1099-R for any regular distribution from a traditional IRA after age 59½:
  • Box 1 = gross amount of the distribution
  • Box 2a = Box 1
  • Box 2b Taxable amount determined marked
  • Box 4 = Amount of federal tax withheld, if any (usually one has no taxes withheld and makes federal and state estimated tax payments if needed to avoid underpayment of taxes)
  • Box 7 = code 7
  • IRA/SEP/SIMPLE box marked
  • Box 12 = State taxes withheld, if any
  • Box 13 = State and state number (should not be needed if Box 13 is blank)
  • Box 14 = equal to box 1 or blank.
  • Instructions for Form 1099-R: https://www.irs.gov/pub/irs-pdf/i1099r.pdf

Submitted by Alan - IRA critic on Mon, 2019-12-16 17:45

  • Also, note that the Box 2a taxable amount is required to show the same amount as Box 2, but this is not always your taxable amount. The taxable amount NOT determined box will be checked, and that means you must determine the actual taxable amount yourself. If you have ever made non deductible TIRA Contributions and filed Form 8606 to report them, then you will also complete another 8606 to report the conversion and a portion of your conversion will be non taxable. If you did NOT file an 8606 for non deductible conversions, you can file them for prior years where you are able to determine that you should have in the first place. That will bring the form up to date to avoid having to pay double taxes on contributions you did not deduct when made. Of course, most people deducted all their contributions and therefore the entire distribution in Box 1 will be taxable.
  • Once you have considered the above point, you can enter different amounts in your tax program to determine your total tax. Compare each with your tax liability with NO conversions. The difference between the two divided by the amount converted is your marginal rate for that conversion amount. It is very possible to have varying nominal rates for a given conversion amount, particularly if you have SS income, qualified dividends, or LT cap gains. If SS is being added to your AGI due to the conversions, your marginal rate will increase considerably until 85% of your SS is included, then it may drop until you hit the next nominal tax bracket. To eliminate confusion, let the tax program do all the work and you can determine the optimal amount to convert for your personal situation. Be sure you do not use too many days to complete this, since conversions requested in the last few days of the year may not get done.

Submitted by David Mertz on Mon, 2019-12-16 19:05

Thanks, I corrected my post regarding box 2a and box 2b Taxable amount not determined.

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