Roth IRA

[TAXMAN]

Someone check me on this. TP age 70 started Roth IRA 7-01-2009. I believe TP can start wd from RothIRA beginning Jan 2014. I don't think he has to wait till 07-02-2014. Right or wrong. Head is a little fuzzy. Manny thanks.

[RitaB]

OK, you may be right, check out the chart on the link below. My brain is fuzzy, too, but I think you're good. And, remember with ROTH IRAs you take out contributions first, so he can make a withdrawal tax and penalty free in 2014 even if we can't count as long as he has enough basis to do so. Form 8606.

http://www.irs.gov/publications/p590b/ch02.html#en_US_2014_publink1000231071

Edited March 25, 2015 by RitaB

[Kea]

Client, age 62, has had Roth for over 5 years.  It was opened in 2006 & I put that in box 11 of the 1099R input screen.  It has code "T" - because the mutual fund company did not age of Roth.  ATX is adding for 8606 and asking for basis (and shows whole amount taxable when no basis present).  After searching this board, I saw a suggestion of just removing the 8606.  That keeps it from showing as taxable, but also shows a red error for missing form 8606.

 

I saw another suggestion of letting ATX know it is a Roth.  ATX does show it as a Roth because it's filling in the distribution in Form 8606 Section III (Distributions from Roth IRA).

 

Any other suggestion for letting ATX know it doesn't need the basis?

 

Thanks!

[Lion EA]

Tell it the year the Roth was opened.

[Kea]

I did!  Box 11 of the 1099R worksheet.  Should it go somewhere else?  Some worksheet for the 8606?

[jklcpa]

I think the only way you are going to get this to not show up as taxable and still e-file the return is to fill out the basis on the 8606 because of the code T.  If it had code Q, it would (should) automatically know that it is entirely nontaxable, but the program can't determine that with code T. 

[Kea]

Thanks.

 

I agree - especially on the 15th.

I doubt the client knows the basis (and shouldn't have to).  Can I just make up something that is higher than the distribution?  Just to keep the program happy.

 

There was another Roth distribution and it did have Code Q - ATX is quite happy with that.

 

I would have thought that putting the 1st year in box 11 of the worksheet would have make the program happy.  But no such luck.

[Gail in Virginia]

Maybe a dumb suggestion - but you do have the taxpayer's date of birth in correctly so the program knows that he is over 59 1/2?

[Kea]

Thanks Gail - it is a good question, because at this time of year anything could happen. 

But, yes, the DOB is entered correctly.

[jklcpa]

I had an issue with ATX handling one with a code Q back in 2012, and it was my husband's distribution so I knew all of the facts. Program insisted it was taxable unless I entered info on the 8606, completely contrary to the forms instructions and that code "Q".  I'm glad to hear they've corrected that, at least, because it was quite frustrating.

 

I had a client with one with code "T" for the past 2 years, and it is interesting that Drake didn't require it and didn't even mention it in the notes and messages. I'm not pumping up Drake here because that could allow someone to file an incomplete return, but if the taxpayer meets all the requirements for not having to file 8606 with code T, then ATX should allow the practitioner the ability to get rid of the form 8606 or override the taxable portion on the return and still allow the e-file.