Roth IRA Distribution

[Burke]

Client converted IRA to ROTH way back in 1998, and then reported over 4 years under those rules. Takes out a nominal distribution this year for the first time, way less than he converted, and it is a Code T. My software says "Roth Distribution, exception applies." I cannot get it it to show it as non-taxable unless I change the code to Q. Doesn't fit 5329 or 8606 instructions. What am I doing wrong?

[Gene V]

What software are you using?--If you are using Lacerte, you can use code T--make sure
you have a Roth base in screen 24 under basis of Roth conversion as of 12/31/2008

If you are not using Lacerte--your software should have a screen for the basis of your Roth

[RLymanC]

Roth

basis....try page 2 part III line 22 form 8606

[Burke]

Thanks. I missed page 2 altogether, and I suppose that is where I need to put it, even though that section is for "unqualifed" distributions. I did have a discussion with the broker, however, who is with a large national firm, about this. It really should not have been a code T, but a code Q. The reason it was done that way, is that this Roth was transferred to them in 2004 and they had no knowledge of its conversion status, basis, etc. So that is their standard practice if they cannot confirm otherwise. (Client converted in 1998). He also said that next year when they have to do basis, they are not required to go back and do it for existing investments, only on new purchases. (Most of the big brokerages do this already.) So that is not going to help us that much until later on down the road.

[Burke]

What software are you using?--If you are using Lacerte, you can use code T--make sureyou have a Roth base in screen 24 under basis of Roth conversion as of 12/31/2008
If you are not using Lacerte--your software should have a screen for the basis of your Roth

I am using ATX. It has a box for "first year oft ROTH contribution" and I put 1998. I would have thought that would work, but it didn't. Will discuss with tech support.