Indirect rollover/Roth conversion – 401(k) withdrawal repaid to Roth IRA
Taxpayer took $97,000 out of qualified retirement plan in early May 2022. They did not have any after-tax basis in the plan. They put this $97,000 back into a Roth IRA at the end of May 2022 with the intention of doing a Roth conversion. I’m preparing their 2022 tax return and trying to make sure I am correctly reporting the transaction. I am showing the $97,000 as taxable income on line 5b, not subject to an early distribution penalty. Is that the only federal tax return reporting needed? I know you report traditional IRA to Roth IRA conversions on Form 8606 but this was a qualified plan to Roth IRA so I’m thinking no 8606 is needed?
Permalink Submitted by David Mertz on Thu, 2023-09-21 17:37
The word ROLLOVER must be included next to line 5b. (Movement of funds from a qualified retirement plan to a Roth IRA is a rollover even when coming from the traditional account in the plan.) There is nothing to report on Form 8606 regarding this transaction.