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According to the IRS Instructions for Forms 1099-R and 5498:

Note. These instructions are for the person completing the Form 1099-R to distribute, and so TaxAct uses these IRS instructions in the program as a guide to handling the amounts reported on forms containing these codes.

Code Q - Qualified distribution from a Roth IRA

Use Code Q for a distribution from a Roth IRA if you know that the participant meets the 5-year holding period and:

  • The participant has reached age 59 1/2, or
  • The participant died, or
  • The participant is disabled.

Code T - Roth IRA distribution, exception applies

Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but:

  • The participant has reached age 59 1/2, or
  • The participant died, or
  • The participant is disabled.

In the TaxAct program, if Code J or T is used, the checkbox is marked to indicate that the 5-Year Holding Period has NOT been met, and entries have been made for the conversion to a Roth IRA then Form 5329 will compute the additional tax on the distribution.

To indicate the 5-year holding period has not been met:

  1. From within your TaxAct return (Online or Desktop), click Federal
  2. Click Retirement Plan Income in the Federal Quick Q&A Topics menu to expand the category, and then click IRA, 401(k), and Pension Plan Distributions (Form 1099-R)
  3. Click New Copy of Form 1099-R (Desktop users click Add) to create a new copy of the form or click Review to review a form already created
  4. Click Quick Entry
  5. Scroll down to the section Additional Information not reported on Form 1099-R

To enter the information about the Roth conversion:

  1. From within your TaxAct return (Online or Desktop), click Federal
  2. Click Retirement Plan Income in the Federal Quick Q&A Topics menu to expand the category and then click Taxpayer [Spouse] Additional taxes on qualified plans (Form 5329)
  3. Click Review next to Early distributions from a retirement plan
  4. Click Continue until you reach the screen with fields for the year in which you converted to a Roth IRA
  5. Enter the amounts from the lines indicated on Form 8606 for the applicable year

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