Yep. As soon as I realized what I'd done, I remembered your posts. It only works if you only have one traditional IRA. I had that 403b for almost 18 years, and my brain just didn't process that it became an IRA when I moved it to the FA.

Also, I absolutely HATE the backdoor Roth loophole. That's got to be the stupidest IRS rule/workaround of them all. It's $6500 a year. Just let people contribute directly, regardless of income. I wish some politician would take up the cause to eliminate it.

I'm thankful for the help here because the alternative was to pay an accountant - prob $500-$600 - just to confirm I screwed up and owe the $1400. And that would just be salt in the wound.

I guess I should be glad it's coming out of my refund. This would hurt even worse if I had to write a check to the IRS.

https://www.hrblock.com/tax-center/irs/forms/form-5498/

I'm not sure what you are doing with TurboTax, but form 5498 is an informational form intended to be kept for your records. Maybe you need to go back and delete the form, then maybe it will just ask you to self report the year end balance (which is what I've always done), then it will ask questions where you will enter information surrounding the IRA contribution and conversion.

The result should be the basis of your IRA relative to the entire balance, which the tax calculation then uses to determine the taxable vs non taxable portion of your conversion. Moving forward, each year TurboTax asks the same each year and will carry forward your pre tax amount (which will be previous year amount, minus the pretax amount withdrawn, +/- earnings losses on the account for the year).

I will still contend you can unwind all of this prior to April 15, leaving your to only pay taxes on any gain you might have gotten on the $6000, that is an administrative process with your FA, and it would not be on any reputable tax form, but would be validated by the may distribution of your 5498.

Good luck, sorry for the unexpected tax hit, I hope you get it figured out.

TXTransplant said:

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Yep. As soon as I realized what I'd done, I remembered your posts. It only works if you only have one traditional IRA. I had that 403b for almost 18 years, and my brain just didn't process that it became an IRA when I moved it to the FA.

Also, I absolutely HATE the backdoor Roth loophole. That's got to be the stupidest IRS rule/workaround of them all. It's $6500 a year. Just let people contribute directly, regardless of income. I wish some politician would take up the cause to eliminate it.

I'm thankful for the help here because the alternative was to pay an accountant - prob $500-$600 - just to confirm I screwed up and owe the $1400. And that would just be salt in the wound.

I guess I should be glad it's coming out of my refund. This would hurt even worse if I had to write a check to the IRS.

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The income limits on Roth, and therefore the backdoor "loophole" , is for your exact scenario.. it is so the IRS can collect taxes from high earners (at higher tax brackets) as a trade off for giving you a way to contribute to Roth if you choose. I personally converted all of my existing pre tax IRA to Roth back in 2009 after the market tanked, and there was a one time opportunity to spread the taxes over 2 years. It was a win for me in a bad time, and a win for the IRS to grab some tax revenue now rather than wait 30 years.

I have not input the form into TurboTax. There is nothing to delete. I am not doing anything except clicking continue to go to the next screen and inputting the information it asks for.

There are very specific things you have to do to correctly report the backdoor conversion. So, some of what you are suggesting I do is not possible within the software. Like I said previously, TurboTax is not lumping together my two IRAs because, for all intents and purposes, TurboTax does not know I converted that 403b to an IRA. All it knows is that I took a distribution from that 403b (as indicated by the corresponding 1099R). It doesn't know where I put that money, other than it's not in a Roth 401k or a Roth

However, in typing this out just now, I went back to TurboTax and edited the 1099R for the 403b rollover. When I went back through the questions, it asks if I moved this money to a Roth 401k or a to Roth IRA. I initially answered NO to both (because on paper, I didn't).

But, if the way the IRS accounts for this is by saying both my IRAs are one account, then I should prob answer YES, I did move money to the Roth. But because I also have a 1099R for the backdoor Roth contribution, if I answer Yes, and go through this process, it says I have a refund of NEGATIVE $84,985.

So, I can't have both the 1099R for the backdoor Roth and pass this $6k through the 403b rollover IRA. I would have to delete the 1099R for the backdoor Roth, which I don't want to do because that was reported to the IRS.

Also, I just realized on that screen that asks for the number from the 5498 form, if instead of combining my two IRAs, I put the value of the one that came from the 403b into the box that asks about outstanding rollovers, I get the same result - ie, my refund drops from $1400 to $73. But based on the definition of an outstanding rollover, that's not what this is, so it's not the correct thing to do.

Bottom line is, I did something I wasn't supposed to do, and TurboTax isn't really set up to accommodate that. Because I shouldn't have done it in the first place.

I understand that the information TurboTax is asking for can be found elsewhere besides from 5498 (ie, from the year end statement for to at account). It just so happens I have the form for one account and not the other.

I was worried about what happens if I put the information for both IRAs on my tax return and then never get the other 5498. I think the likelihood of that happening is slim to none, but it did cross my mind. Personally, I would prefer to have all of the information from the relevant IRS firms before filing. But I think it's clear at this point that I do owe the extra taxes, regardless of whether or not I get the missing 5498.