February 23, 2014

NerdWallet: Roth IRA Contribution

I made a non-deductible "Backdoor" Roth IRA Contribution (to get around income limits), and my taxes went up in TaxAct when filing taxes.

I am using a 1099-R that I received with a Gross distribution (box 1) and Taxable amount (box 2) in agreement, plus 2b checked (taxable amount not determined). Distribution code is showing "02 - "Early distribution, exception applies (under age 59.5)". Is the key here that this distribution code was messed up by the provider of the 1099-R (Vanguard), in which case it should be a "G - Direct rollover of a distribution ... to a qualified plan" ?

 CFP® Boston, MA
Did you file Form 8606 when you made your non-deductible contribution?  It sounds like you have not reported your basis in the IRA, and therefore is counting all of the funds in it as previously deducted.