401k distribution direct to a roth
It is pretty clear that a 401k to a trad ira is tax reported as a distribution code g from the 401k and a rollover contribution into the trad 5498.
Is this also true if you go from the 401k to a roth ira? The transaction is technically a conversion and if you convert taxable money you would pay tax. Like wise if you convert non taxable money (non roth after tax basis only) there would be no tax. But either way I believe this is tax reported as a 401k distribution code g and a rollover into the roth 5498. The tax owed is calculated on the client’s 1040 forms and schedules.
Correct?
Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2015-01-07 19:29
Yes, Code G would be used. The only difference is that a qualified rollover contribution to a Roth IRA would include the taxable amount in Box 2a and any basis recovery in Box 5. Any taxable income goes on line 16b, and Form 8606 is not needed.
Permalink Submitted by Denise Dawson on Wed, 2015-01-07 21:29
What is the reporting on the 5498? Rollover or conversion.
Permalink Submitted by Alan - IRA critic on Wed, 2015-01-07 21:54
Box 2 Rollover contributions. A conversion is a rollover from a non Roth IRA to a Roth IRA and conversions go in Box 3.