1099-R for a Roth Conversion: Boxes, Form 8606, and Line 4b

A Roth conversion arrives on Form 1099-R because your custodian is required to report any retirement distribution of $10 or more, and the IRS treats the money moving out of your Traditional, SEP, or SIMPLE IRA as a distribution even when it lands directly in a Roth.1Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. To report a 1099-R for a Roth conversion, put the gross amount from Box 1 on Form 1040 Line 4a, calculate the taxable portion on Form 8606, and enter that figure on Line 4b. The complication, when there is one, lives in Box 2a and in whether you have after-tax basis in any Traditional IRA.

The Boxes That Matter

Box 1 (Gross Distribution). The full dollar amount that left the source account before any withholding. This is the number you report on Form 1040 Line 4a regardless of how much of it is actually taxable.2Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Roth IRA Conversions

Box 2a (Taxable Amount) and Box 2b. For a Traditional IRA conversion, custodians are instructed to enter the total conversion amount in Box 2a and check “Taxable amount not determined” in Box 2b.2Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Roth IRA Conversions The checked box is your custodian saying it does not know your basis. If you have any after-tax contributions in your IRAs, the real taxable figure will be lower than Box 2a, and you calculate it yourself on Form 8606.

Box 7 (Distribution Code). This tells the IRS what kind of transaction occurred. For an IRA-to-Roth conversion, expect:

If you converted from a Traditional IRA and the form shows Code G, that is a custodian error. The wrong code can generate an IRS mismatch notice; the fix is covered further down.

Calculating the Taxable Amount

If every dollar in your Traditional IRAs came from deductible contributions and earnings, the whole conversion is taxable and Box 1 equals your taxable income from the transaction. If you ever made nondeductible contributions to any Traditional IRA, you have basis, and converting basis does not create new tax because you already paid tax on those dollars.

You cannot pick which dollars to convert. Under the pro-rata rule in IRC Section 408(d)(2), the IRS treats all of your Traditional, SEP, and SIMPLE IRAs as a single pool when calculating the taxable share of any distribution or conversion.6Office of the Law Revision Counsel. 26 USC 408 Individual Retirement Accounts Basis in one account and pre-tax money at another custodian still get combined.

The nontaxable percentage of your conversion equals your total basis divided by the total value of all Traditional, SEP, and SIMPLE IRAs on December 31 of the conversion year, plus any distributions (including the conversion itself) taken during the year. Say you have $15,000 in total basis and all your IRAs together are worth $150,000 on December 31 after the conversion. Ten percent of the conversion is nontaxable. If you converted $50,000, then $5,000 is a tax-free return of basis and $45,000 is taxable.

Basis tracking runs through Form 8606, which you file every year you make nondeductible IRA contributions and every year you take a distribution or convert.7Internal Revenue Service. About Form 8606, Nondeductible IRAs Your starting basis for the current year comes from Line 14 of the most recent Form 8606 you previously filed.8Internal Revenue Service. Instructions for Form 8606 (2025) Never filed one, but you know you made nondeductible contributions? You can file standalone 8606s for prior years to establish that basis before it is lost.

Filling Out Form 8606 and Form 1040

Form 8606, Parts I and II

If you have any basis to account for, start with Part I. Enter current-year nondeductible contributions on Line 1, add prior-year basis on Line 2, and work through the remaining lines to figure the nontaxable portion of your conversion.8Internal Revenue Service. Instructions for Form 8606 (2025)

Then Part II, “Conversions From Traditional, SEP, or SIMPLE IRAs to Roth IRAs,” runs Lines 16 through 18. Line 16 picks up the nontaxable portion from Part I, Line 17 captures any additional basis adjustments, and Line 18 is the taxable conversion amount. If Line 18 is greater than zero, that figure goes to Form 1040, Line 4b.9Internal Revenue Service. Form 8606 (2025) Nondeductible IRAs Line 19 belongs to Part III and covers distributions from Roth IRAs, not conversions.10Internal Revenue Service. Instructions for Form 8606 (2025) – Section: Part III

Form 1040, Lines 4a and 4b

Report the gross conversion amount from Box 1 of the 1099-R on Line 4a (IRA distributions). Enter the taxable amount from Line 18 of Form 8606 on Line 4b. If you had no basis, Lines 4a and 4b match. If you had basis, Line 4b is smaller.

Filing Form 8606 is mandatory in any year you convert, even if 100% of the conversion is a nontaxable return of basis.8Internal Revenue Service. Instructions for Form 8606 (2025) Skip it and the IRS has no record of your basis, which means the full conversion can be treated as taxable. The direct penalty for failing to file Form 8606 when reporting nondeductible contributions is $50, waivable for reasonable cause, but losing basis you were entitled to claim is the larger cost over time.11Internal Revenue Service. 2025 Instructions for Form 8606 Nondeductible IRAs

If Your 1099-R Is Wrong

Custodians sometimes use the wrong distribution code, leave Box 2a blank when it should be populated, or report an incorrect gross amount. Call your custodian first and ask for a corrected 1099-R, which has the “CORRECTED” box checked at the top. Most fix obvious errors within a few weeks.

If a corrected form has not arrived by the end of February, contact the IRS at 800-829-1040. The IRS will reach out to the custodian and send you Form 4852, a substitute for the incorrect 1099-R.12Internal Revenue Service. Form 4852 Substitute for Form W-2 or Form 1099-R You fill in the correct figures, explain the steps you took to get the form corrected, and attach Form 4852 to your return. Filing with a known-wrong 1099-R and no substitute invites a mismatch notice.

Two Situations That Change What You See on the Form

Withholding on the Conversion

If your custodian withheld federal income tax from the conversion, the withheld dollars never entered the Roth. Convert $100,000 with 22% withholding and only $78,000 lands in the Roth. The IRS still treats the full $100,000 as the conversion for reporting on Line 4a, but the $22,000 that went to taxes is a distribution that was not rolled over. If you are under 59½, that portion can trigger the 10% early withdrawal penalty on top of the income tax.13Internal Revenue Service. Topic No. 557, Additional Tax on Early Distributions From Traditional and Roth IRAs The cleaner approach is to decline withholding and pay estimated tax from outside funds so the entire conversion moves into the Roth.

Conversions and RMDs

If you are 73 or older (or 75 starting in 2033 for those born in 1960 or later), take your required minimum distribution before converting anything else. The first dollars leaving your IRA each year satisfy the RMD, and RMDs cannot be rolled over or converted.14Internal Revenue Service. Retirement Plans FAQs Regarding IRAs Convert the RMD by mistake and the amount is an ineligible rollover; leaving it in the Roth draws a 6% excess contribution penalty for each year it stays. In practice this means taking the RMD as a regular distribution first, then converting from the balance that remains. Depending on the custodian, the RMD and the conversion may appear on separate 1099-R forms or as separate entries on the same one.