How to Code the 1099-R (After Tax $ converted to Roth)

[AllThingsForGood]

Good morning. I have a client (1 ee plan) who rolled INTO the Plan aftertax money. To establish basis within his Plan, I'm preparing a 1099-R showing the after-tax amount as being 'converted' to Roth inside the Plan.

Can you please tell me if I'm thinking right about the 1099-R?

Box 1, the amount that came in is shown ($30k). Box 2a, taxable amount $0. Box 7 - H (what else could this code be? is H right?)

 

Thanks !

[Paul I]

It would help to have clarity on exactly what is being reported.  Are you preparing a 1099-R for:

• the plan from which the after-tax money was moved into a receiving plan,
• OR for a plan where an in-plan rollover was made from an after-tax account into a Roth account,
• OR something else?

[AllThingsForGood]

The After Tax money came IN to my client's solo-401k plan. The financial advisor wants record of its basis ($30k), so wants a 1099-R prepared showing the AT money being converted, inside my client's solo-401k plan, to Roth.

I have never had this circumstance, and even questioned the necessity of a 1099-R at all. 

Is a 1099-R necessary? (Might should have been my first question) If NOT, is there any reporting necessary from the solo-k plan?

[Paul I]

From where did this money come from? Was the after-tax money a contribution into your client's plan or was it a rollover into your client's plan from another qualified plan, or from somewhere else?

Once the after-tax money was inside your client's plan, that after-tax account should have had a tax basis associated with it.  This would then get to next question about when was or will the after-tax account was/is being converted to Roth?

[AllThingsForGood]

The AT money is a contribution to my client's plan. (I said "rollover" in my initial posted question - sorry!)

The deposit of $30k is the amount being 'converted' to Roth, inside the 401k plan. It's being considered converting on the date of deposit so there are no gains associated with that basis.

[Paul I]

The details are very helpful. Since the Roth conversion is taking place in 2026, the 1099-R will be for 2026 filed on a 2026 Form 1099-R.

On that 2026 1099-R,

• Box 1 Gross Amount will be the amount of the contribution.
• Box 2a Taxable Amount will be the amount of the contribution
• Box 7 will be Code G.

You should remind the client to factor the taxable amount into the calculation of any estimated tax withholding for 2026.

Consider offering to give the financial adviser a copy of the contribution check as documentation of the after-tax contribution creating basis in the plan.

[AllThingsForGood]

Thank you so much for helping me, Paul. I need to ask, though, why is the amount taxable on the 1099-R that the receiving-plan issues? And, if there's a Code G, wouldn't that contradict the Box 2a having any amount in it?

Thanks!

[David D]

Box 1 is 30,000, Box Box 2A is 0, Box 5 is 30,000

[AllThingsForGood]

Thank you David!

And Thanks to Paul too, for walking through that with me.

[David D]

One more t

One more thing, That 30K goes into your testing, but most likely this is an owner only plan.

[Artie M]

Just in case, I agree with @David D's response as long as the "contributions" are solely after-tax contributions and does not include any earnings on those after-tax amounts.  If the "contributions" include earnings, those earnings (and just the earnings) are taxable and reported in Box 2A.  Also agree that Code G is used, but sometimes also Code 2 or 7 depending on plan/admin system (and age, of course).