Form 8606 – employer plan Roth conversion
Has anyone been involved in reporting a Roth conversion from an employer plan?
Will the 1099-R show taxable and non taxable portion of the distribution? I don’t see any reporting for employer plan conversions that would mirror the reporting via Form 8606.
How is the IRS (and the taxpayer) made aware of the taxability of the conversion?
Jim
Permalink Submitted by Alan Spross on Tue, 2010-02-23 18:34
Jim,
By the 1099R. Form 8606 does not apply to direct Roth conversions from an employer plan.
The specific reporting instructions for this are described on p 27 of the 2009 Form 1040 Instructions. The gross amount should show in Box 1, nothing in 2a, and the after tax contributions in Box 5 of the 1099R. The 1040 instructions for the taxpayer tells them to subtract the after tax amount in Box 5 from the Box 1 amount and enter that amount on line 16b. This is the taxable amount. In this case “rollover” is NOT entered next to 16b.
But for 2010 conversions, the IRS will have to come up with a form or check box somewhere to indicate if the taxpayer is going to opt out of the two year income deferral. So the complete reporting for 2010 has not yet been released.