qbteachmt
Level 15

It helps to know what you expect to see. Here are what seems to be the scenario for your taxpayer.

They got part of the money, so there should be an amount withheld. That means there is a Gross Distribution, some of which is Roth Conversion and some is forwarded against taxes. Or, they got it all and did the rollover portion themselves, so the withholding will be higher, in this example. This assumes you have a qualified rollover or transfer for the conversion.

The distribution, even with a conversion, is fully taxable, unless there is some Basis in the Traditional IRA (paid in post-tax and not deducted in the year contributed). If so, then there would be pro-rated taxable. If they never made that sort of contribution, then Basis is 0 and anything that happens (even in combination) will be taxable Gross.

If the person is under 59 1/2, the math of Gross minus the $5k is early distribution subject to penalty in addition to the tax, unless some exception applies.

So, yes, the worksheet is going to need to you to scroll through it, confirm values are entered and boxes are checkmarked, to trigger all the events (and work through them in this order):

Gross distribution taxable

Withholding

Conversion

Early Distribution penalty on portion kept + withheld

Pro-rated taxable in the case of basis

 

If you dealt with each event, it should work for you.

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