How to Do a Backdoor Roth IRA Conversion in TurboTax 2020

A backdoor Roth IRA conversion is a strategy used to contribute to a Roth IRA even if you exceed the income limits for direct contributions. This involves making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA.

Here are the steps on how to enter a backdoor Roth IRA conversion in TurboTax 2020:

Step 1: Enter the Non-Deductible Contribution to the Traditional IRA

1. Open your TurboTax 2020 return.
2. Click on the “Deductions & Credits” tab.
3. Click on “I’ll choose what I work on.”
4. Scroll down to “Traditional and Roth IRA Contributions” and click “Start.”
5. Select “Traditional IRA.”
6. Enter the amount of your non-deductible contribution.
7. Answer “No” to the question, “Is this a repayment of a retirement distribution?”
8. Continue through the screens until you reach the “Choose Not to Deduct IRA Contributions” screen.
9. Select “Yes, make part of my IRA contribution nondeductible.”
10. Enter the amount of your non-deductible contribution.
11. Continue through the remaining screens.

Step 2: Enter the Conversion from a Traditional IRA to a Roth IRA

1. Click on the “Wages & Income” tab.
2. Click on “I’ll choose what I work on.”
3. Scroll down to “IRA, 401(k), Pension Plan Withdrawals (1099-R)” and click “Start.”
4. Answer “Yes” to the question, “Did you get a 1099-R in 2020?”
5. Enter the information from your 1099-R.
6. Answer “Yes” to the question, “Tell us if you moved the money through a rollover or conversion.”
7. Select “I converted some or all of it to a Roth IRA.”
8. Enter the amount of your conversion.
9. Continue through the remaining screens.

Additional Information

• If your conversion includes contributions made in 2020 for 2019, you will need to check your 2019 return to make sure it includes Form 8606, Nondeductible IRAs. If this form is not included in your 2019 return, you will need to fill out a 2019 Form 8606 to record your nondeductible basis for conversion and mail this form to your designated IRS office. Do not amend your 2019 return to record your basis.
• To enter this prior-year basis in TurboTax:
  • On the “Here’s your 1099-R info” screen, select “Continue.”
  • Search “1099-R” and select the jump-to link to access this screen.
  • Answer “Yes” to “Any nondeductible Contributions to your IRA?” if you had any nondeductible contributions in prior years.
  • Answer the questions about the basis from line 14 of your 2019 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs.

By following these steps, you can enter a backdoor Roth IRA conversion in TurboTax 2020. This strategy can help you save for retirement even if you exceed the income limits for direct Roth IRA contributions.