What is an IRA Rollover vs. an IRA Conversion?

What is an IRA rollover?

It is considered a "rollover" if you are moving an IRA from one company to another. You have 60 days from the time you receive the funds from one company to invest it with another company before it becomes taxable to you.

To make an entry for an IRA Rollover in our program go to:

1. Federal section
2. Income
3. Select My Forms
4. 1099-R, RRB, SSA
5. Add or Edit an IRA- 1099-R and make your entries and mark the check box in the middle left corner of the screen. It states "Check here if all/part of the distribution was rolled over, and enter the rollover amount."

What is an IRA Conversion?

If you "convert" an IRA, you are CHANGING it ("converting it") from a traditional IRA to a ROTH IRA.

To make this entry in our program go to:

1. Federal section
2. Deductions
3. Select My Forms
4. Adjustments to Income
5. Nondeductible IRAs (Form 8606) - make the entry on the line that states "Net amount converted from traditional, SEP, and SIMPLE IRAs to Roth IRAs". 

Additional Information:

• • What should I enter for Box 2a, Taxable Amount (Form 1099-R)?
  • What do the distribution codes in Box 7 of my 1099-R mean?
  • How do I calculate my early withdrawal penalty?
  • What are the Retirement Savings Contributions Credit (Form 8880) requirements?
  • Should I use the Simplified Method Worksheet to figure my 1099-R's taxable amount?