Employer contributions to a Roth IRA under a SEP or SIMPLE plan will be reported on Form 1099-R

Clever. Treating employer contributions as a contribution to the traditional SEP or SIMPLE IRA account followed by an immediate conversion to Roth avoids the need for anything new on a W-2. I’ll bet it will confuse the employees initially, though. The Form 1099-R will have code 2 or code 7 (not code S). I suspect there will need to be a change to the instructions for Form 8606 since this pseudo-conversion does not include any basis in nondeductible traditional IRA contributions that the employee might have.

Similarly, employer contributions to a designated Roth account in a qualified retirement plan will be treated as a contribution to the traditional account followed by an entirely taxable In-plan Roth Rollover reported with code G on a Form 1099-R.



There goes the simple explanation that a 1099R only reports distributions, now that it will be reporting Roth employer contributions. The 1099R Inst for 2023 have not been revised, but I doubt that there have been any such Roth matching contributions made this year. Notice 2024-2 at least indicates that the IRS has been working on the boatload of guidance that Secure 2.0 will require. 



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