TurboTax errors when reporting retirement account rollovers from 401k to Traditional IRA to Roth IRA

I'm struggling to figure out how to properly report my rollovers in TurboTax, keep getting error messages and could really use some help. Here's what happened with my retirement accounts this year: 1. Got laid off from my job in September and did a direct rollover of my 401k (~$87,000) to a traditional IRA at Fidelity. 2. About 3 weeks later, I realized I didn't actually want a traditional IRA for tax reasons, so I did another direct rollover to a Roth IRA at Vanguard. 3. Now I've received two 1099-R forms: one for the 401k to Traditional IRA move, and another for the Traditional IRA to Roth IRA conversion. The entire amount was transferred in both rollovers, but TurboTax keeps flagging errors when I try to enter this. I think I'm supposed to pay taxes on the conversion to Roth, but the software isn't calculating this correctly or something? Not sure if I need to mark these as rollovers or conversions or both. Totally confused and don't want to mess this up!

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18 comments

Dylan Mitchell

•8M

Those multiple rollovers can definitely be tricky in tax software! Let me help clarify how to handle this situation. For the first transaction (401k to Traditional IRA), this is a non-taxable direct rollover. When entering the 1099-R for this transaction in TurboTax, you should: - Make sure box 7 on the 1099-R shows code "G" for direct rollover - Indicate this was rolled over to a Traditional IRA - The taxable amount should be zero since it's a rollover between pre-tax accounts For the second transaction (Traditional IRA to Roth IRA), this is actually a conversion, not just a rollover, and is taxable: - When entering this 1099-R, the full amount will be taxable income - TurboTax should recognize this as a conversion rather than just a rollover - The taxable amount will be the entire amount moved from Traditional to Roth The errors might be occurring because TurboTax sometimes needs specific information entered in a certain order. Try re-entering the forms from scratch, following the prompts exactly.

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Dylan Mitchell

•8M

You'll need to pay taxes on the full amount converted from Traditional to Roth IRA in the year the conversion happened. Unfortunately, the option to spread the tax burden over multiple years was a special provision that only applied to conversions made in 2010. For your current situation, the entire converted amount will be added to your taxable income for this year. This could potentially push you into a higher tax bracket, so it's worth calculating the impact. If you've already completed the conversion, you'll need to plan for the tax bill, but for future reference, some people choose to convert portions of their Traditional IRAs over several years specifically to manage the tax impact.

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Dmitry Popov

•8M

After dealing with a nearly identical situation last year, I discovered taxr.ai (https://taxr.ai) and it saved me hours of frustration. I had done multiple rollovers - first from my 403b to a traditional IRA, then part of that to a Roth, and TurboTax kept giving me errors too! The site lets you upload your tax documents (like those 1099-Rs) and their AI system explains exactly how to report everything correctly. It showed me specifically which boxes in TurboTax needed to be checked for each transaction, and explained the tax implications in simple terms. Much clearer than the generic help articles. For the Traditional to Roth conversion specifically, it spotted that I needed to use Form 8606 to report it properly and showed me exactly which options to select in TurboTax. Seriously made the difference between giving up and filing correctly.

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Dmitry Popov

•8M

It absolutely works with TurboTax specifically - it showed me screenshots of the exact screens I needed to navigate to and which checkboxes to select for my rollover situation. Super helpful when you're stuck on a specific screen with confusing options. For state-specific issues, it actually addressed my NY state tax questions too. I had concerns about how the Roth conversion would be treated on my state return, and it explained the differences. I believe it covers most states including California, but you can always start with your federal questions and then ask about CA-specific treatment as a follow-up.

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StarSailor}

•8M

Just wanted to follow up about my experience with taxr.ai from my previous comment. I decided to try it despite my skepticism, and I'm genuinely impressed. I uploaded my two 1099-Rs from my Traditional to Roth conversion process, and it immediately identified that I was dealing with a taxable event that TurboTax might mishandle. It showed me exactly which screens to navigate to in TurboTax and which options to select - including pointing out that I needed to use Form 8606 for the traditional IRA to Roth conversion. It even explained how California treats the conversion (essentially the same as federal in my case, but good to confirm). The step-by-step guidance was actually way more specific than I expected. Saved me from what would have been a costly mistake since I was about to report things incorrectly!

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Miguel Silva

•8M

If you're still facing issues after trying to fix your TurboTax entries, you might want to consider calling the IRS directly. They can answer specific questions about how to report rollovers and conversions. I was in a similar situation last year and spent WEEKS trying to get through to them. After 12+ attempts and hours on hold, I discovered Claimyr (https://claimyr.com) through a YouTube video (https://youtu.be/_kiP6q8DX5c). They somehow get you connected to an IRS agent usually within 15-30 minutes instead of the typical 2+ hour wait (if you even get through at all). I was able to speak with an actual IRS representative who walked me through exactly how to report my 401k to IRA to Roth conversion chain on my tax forms. They confirmed I was handling the taxable portion correctly, which gave me peace of mind before filing.

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Miguel Silva

•8M

It basically uses an automated system that navigates the IRS phone tree and waits on hold for you. Then when it actually connects with an agent, it calls your phone and connects you directly. So instead of you personally waiting on hold for hours, their system does it for you. I was pretty skeptical too until I tried it. The first time I used it, I got connected to an IRS agent in about 24 minutes, when previously I couldn't get through at all after multiple attempts. They don't create any special access - they just handle the frustrating waiting process for you.

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Connor O'Neill

•8M

I need to follow up on my skeptical comment about Claimyr. I decided to try it since I've been trying unsuccessfully to reach the IRS about a similar retirement account issue for over a month. I honestly can't believe it worked. I got connected to an IRS agent in about 35 minutes, which is miraculous considering I spent over 3 hours on my last attempt before getting disconnected. The agent was able to confirm exactly how I should be reporting my rollover chain on my tax forms, and clarified that yes, I did need to pay taxes on the full amount converted to a Roth IRA, but at least now I'm confident I'm filing correctly. Saved me from a potential audit headache and the mental stress of not knowing if I was doing it right.

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Yara Nassar

•8M

Yes, that actually sounds correct! Code "G" indicates a direct rollover to another qualified plan (your 401k to Traditional IRA), which is non-taxable. Code "2" typically indicates an early distribution, but for IRA to Roth IRA conversions, that's often the code used since technically it's considered a distribution from your Traditional IRA that's then contributed to your Roth. The confusion might be in how you're telling TurboTax about the second transaction. When entering the second 1099-R, make sure you specifically indicate it's a conversion to a Roth IRA rather than just a regular distribution. There should be a specific question or option for this in the interview process. It's easy to miss!

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