How To Report 2023 Mega Backdoor Roth In H&R Block (Up to date)

[Updated on January 16, 2024 with screenshots from H&R Block tax software for 2023 tax filing.]

A Mega Backdoor Roth is completely different from a daily Backdoor Roth. It’s finished by making non-Roth after-tax contributions to a 401k-type plan after which transferring it to the Roth account throughout the 401k-type plan or taking the cash out (with earnings) to a Roth IRA.

It’s an effective way to place further cash right into a Roth account with out having to pay a lot further tax. Not all plans enable non-Roth after-tax contributions however some estimated that 40% of individuals can do it.

Suppose you probably did a Mega Backdoor Roth final 12 months. You must have acquired a 1099-R kind out of your 401k plan supplier. You’ll have to account for it in your tax return. Right here’s the best way to do it in H&R Block tax software program.

Use H&R Block Obtain

The screenshots on this put up are from H&R Block Deluxe downloaded software program. The downloaded software program is each inexpensive and extra highly effective than the net model. A consumer reported getting an error from the net model of H&R Block in remark #8. The H&R Block downloaded software program doesn’t give that error.

For those who haven’t paid in your H&R Block on-line submitting but, you should buy H&R Block downloaded software program from Amazon, Walmart, Newegg, or Workplace Depot and swap to the downloaded software program. For those who’re already too far alongside together with your entries, make this your final 12 months of utilizing the net model and swap to the downloaded model subsequent 12 months.

For those who use different software program, please learn:

Inside the Plan Or To Roth IRA

You are able to do the mega backdoor Roth in two methods — convert throughout the plan or withdraw to a Roth IRA. Changing throughout the plan is way simpler, and lots of plans automate the method. Transferring to a Roth IRA additionally works. See the earlier put up Mega Backdoor Roth: Convert Inside Plan or Out to Roth IRA?

Right here’s the situation we’ll use for example:

You contributed $10,000 as non-Roth after-tax contributions to your 401(ok). By the point you transformed the cash to the Roth account throughout the plan or transferred it to your Roth IRA, your contributions earned $200. You transformed $10,200 to your Roth account.

I’m utilizing 401(ok) as a shorthand. It really works the identical in a 403(b). Listed here are the entries into H&R Block software program.

1099-R Entries

Go to Federal -> Earnings -> IRA and Pension Earnings (Kind 1099-R). You possibly can import the 1099-R or enter it manually. I’m displaying guide entries.

Our 1099-R is a traditional 1099-R. Enter the numbers out of your 1099-R as-is. Ours seems to be like this:

The gross quantity transformed to the Roth account reveals up in Field 1. The earnings are in Field 2a. For those who didn’t have earnings in your rollover, Field 2a is zero. “Taxable Quantity Not Decided” below Field 2b is left unchecked. The quantity of your non-Roth after-tax contributions reveals in Field 5. Field 7 has code G.

The IRA/SEP/SIMPLE field in Field 7 in your 1099-R ought to NOT be checked.

We’re not a retired public security officer.

Rollover Vacation spot

The Roth 401k account is formally a “designated Roth account” within the plan. Select “Designated Roth account” if you happen to transformed throughout the plan. Select “Roth IRA” if you happen to took the cash out of the plan to your Roth IRA.

That’s it. It’s so simple as that.

Confirm on Kind 1040

Now we confirm we’re taxed solely on the $200 in earnings, and never on the $10,000 non-Roth after-tax contributions.

Click on on “Varieties” within the high menu bar. Double-click on “Kind 1040 and Schedules 1-3” within the varieties listing.

Scroll down to search out Line 5. The gross quantity transferred to the Roth account reveals on Line 5a. Line 5b reveals you’re taxed solely on the earnings. For those who didn’t have earnings, Line 5b can be zero.

If you’re finished trying on the kind, shut the varieties window to get again to the interview.