Roth IRA + Regular Pensions

[Lynn EA USTCP in Louisiana]

My client has Roth IRA as well as regular IRA and pension distributions.  When I looked at line 4a it showed only the nontaxable Roth IRA amount, $13,314, while line 4b showed the taxable amount of the regular IRA and pension distributions, $20,780.  I think line 4a should include all amounts, $34,094 (Roth, IRA, pension) and line 4b is correct at $13,314.  Anyone else run into this issue?

PS - I tried ATX chat feature and the little wheel just turns and churns and no one comes on the line.

Thanks !

[EricF]

I've seen that on a return, too.  I thought for a minute that with the new reporting form, IRS might have changed how they wanted to see it.  But I looked at the 1040 instructions, page 30, and for partially taxable pensions, it says box 4a should show the amount from Line 1 of Form 1099-R.  So I think ATX is wrong on this one.

[PaulH]

There are many posts on the official board about what should and shouldn't be included on lines 4a and 4b, including ATX's defense of their handling. I've been too lazy to try to figure out who is right until I run into a problem, but it's probably a lot faster to search the board than to get an answer from support.

[Terry D EA]

Lynn, you are correct regarding the amounts that belong in each box. I know you know this but the Roth distribution is reported on form 8606. Apparently I made a mistake one time where I did not put a Roth distribution on the 8606 simply because the distribution was not taxable with all appropriate boxes checked on the 1099R input in Drake. The IRS sent a letter taxing the whole amount and the correction was to submit the 8606. So, just cautioning a bit here.

[TAXMAN]

What I have noticed that if the pension/ira is fully taxable no number on 4A. Roth and partially taxable IRA's still going to 4506.

[Randall]

I put my Roth amount on 8606 and it flowed to 1040 correctly.  With another client, there was no Roth, but pension money plus an IRA.  I checked the IRA box on the 1099R input and it didn't show up on 4a, just 4b.  Some of the pension money was nontaxable so 4b was greater than 4a, which didn't look right.  I just unchecked the IRA box and the total gross flowed to 4a, taxable portion to 4b.

 

[Randall]

This still seems to be a problem in ATX.  I think lIne 4a should be higher than 4b if not all is taxable.  If I mark all the 1099R amounts as IRA, it flows to line 4a properly, with 4a higher than 4b.  Anyone else still having this problem?  Is it ok to mark non-IRA 1099Rs as IRA just to get the amounts correct on 4a and 4b?

 

[Randall]

Another wrinkle.  I used the simplified method for one of my 1099Rs (non IRA).  By marking it an IRA in order to have the total gross amount flow to line 4a, I now get a red letter notice that IRAs aren't eligible for the simplified method.

 

 

[Randall]

Again.  If I unmark the non-IRAs and also unmark the IRA as an IRA, then correct gross amount flows to line 4a and correct taxable amount flows to 4b.  And my non-IRA using Simplified Method doesn't show up as a warning.  So I figured a work around in ATX but the one IRA 1099R is not marked as an IRA.  Does anyone see that as a problem?

[TAXMAN]

I just reread my post above. Glasses must be bad or fingers can't find right #'s. Not to 4506 but to 8606. I too have tried to get the #'s in right boxes to the point where I manually calculate the taxable amount to be sure it is right. Should not have to do that with the software. Agreed.

[Randall]

The 8606 aside, the former two separate lines for IRAs and non-IRAs are now combined into one line.  If gross and taxable amounts are the same, no problem.  But if different, any 1099R marked IRA will throw off the total for line 4a.  I just unmark them all as being 'IRA'.