Entering IRA recharacterizations

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Refer to Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs) and Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs) for exact reporting requirements.

Complete the following steps to enter an IRA recharacterization.

To enter a traditional IRA distribution that was converted to a Roth IRA, and then recharacterized back to a traditional IRA, first complete the steps detailed in Converting a traditional IRA to a Roth IRA. Then, complete the following steps on a second unit of Screen 1099R.

  1. Enter the following information on Screen 1099R.
    • Enter the fair market value in box 1.
    • Enter 0 (zero) in box 2a.
    • Enter code R or N in box 7.

      Note: Use code R for a prior year recharacterization. Use code N for a current year recharacterization.

  2. In the applicable Screen 1099R-3, select the appropriate code in the Recharacterization type fieldview.
    • Amounts originally contributed to a traditional IRA being recharacterized to a Roth contribution IRA are identified with code 1.
    • Amounts originally converted to a Roth IRA from a traditional IRA being recharacterized to another IRA type are identified with code 2.
    • Amounts originally contributed to a Roth IRA being recharacterized to another IRA type are identified with code 3.
    • Amounts originally converted to a Roth IRA from a Qualified Retirement Plan being recharacterized to another IRA type are identified with Code 4.
  3. Enter the original amount that was converted or contributed in the Original conversion or contribution amount field.

    Note: If you are converting from IRA to Roth and recharacterizing back to IRA, click the IRA tab and enter an amount in the Roth IRA conversion recharacterizations for traditional IRAs field.

  4. Open Screen IRA in the Retirement folder and enter any current year contributions, basis information, and IRA values as necessary.

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