A Roth conversion shows up on Form 1099-R because the IRS treats it as a distribution from your Traditional, SEP, or SIMPLE IRA, even when the money moved directly into the Roth. To report a 1099-R Roth conversion, take the gross amount from Box 1 to Line 4a of Form 1040, use Form 8606 to calculate how much of the conversion is actually taxable after any after-tax basis, and put that taxable figure on Line 4b.
What the Boxes on the 1099-R Mean
Custodians file Form 1099-R for any retirement account distribution of $10 or more, conversions included.1Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Three boxes carry the weight.
Box 1 (Gross Distribution) is the total that left the Traditional, SEP, or SIMPLE IRA before any withholding. This full amount goes on your return regardless of how much of it is taxable.2Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Roth IRA Conversions
Box 2a (Taxable Amount) is where confusion starts. For a Traditional IRA conversion, custodians are told to enter the full conversion in Box 2a and then check Box 2b, “Taxable amount not determined.”2Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Roth IRA Conversions That checked box is the custodian saying they reported the gross figure but don’t know what portion is truly taxable. If you have any after-tax basis, the real taxable amount will be lower than Box 2a, and you calculate it yourself on Form 8606.
Box 7 (Distribution Code) tells the IRS what kind of transaction happened:
- Code 2 for a Traditional IRA conversion when you are under 59½.3Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Distribution Codes
- Code 7 for a Traditional IRA conversion when you are 59½ or older.3Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Distribution Codes
- Code G for a direct rollover from an employer plan such as a 401(k) or 403(b) into a Roth IRA. It does not apply to IRA-to-Roth conversions.4Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Direct Rollovers
- Code H for a direct rollover from a designated Roth account, like a Roth 401(k), into a Roth IRA.5Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025) – Section: Designated Roth Accounts
If you converted from a Traditional IRA and see Code G, that is a custodian error. The wrong code can produce an IRS mismatch notice, so it is worth catching before you file.
Figuring the Taxable Portion When You Have Basis
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. But if you have ever made nondeductible contributions, you have basis, and converting basis creates no new tax because you already paid tax on those dollars.
You cannot choose which dollars to convert. Under the pro-rata rule in IRC Section 408(d)(2), the IRS treats all your Traditional, SEP, and SIMPLE IRAs as one pool when figuring how much of any conversion is taxable.6Office of the Law Revision Counsel. 26 USC 408 Individual Retirement Accounts Basis in one account at one custodian and pre-tax money in another still get combined.
The nontaxable percentage equals your total basis divided by the combined December 31 value of all your Traditional, SEP, and SIMPLE IRAs plus any distributions or conversions taken during the year. Example: $15,000 of basis and $150,000 of total IRA value at year end means 10% of any conversion is a tax-free return of basis. Convert $50,000 and $5,000 comes out tax-free, leaving $45,000 as taxable income.
Tracking basis means filing Form 8606 in every year you make nondeductible 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 your most recently filed Form 8606.8Internal Revenue Service. Instructions for Form 8606 (2025) If you have never filed one and there are nondeductible contributions in your history, you can file a standalone Form 8606 for prior years to lock in that basis.
Putting the Numbers on Form 8606 and Form 1040
Two forms carry the reporting. Form 8606 does the math; Form 1040 reports the result as income.
Form 8606, Parts I and II
Start with Part I if you have basis. 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 share of the conversion.8Internal Revenue Service. Instructions for Form 8606 (2025)
Then Part II, “Conversions From Traditional, SEP, or SIMPLE IRAs to Roth IRAs,” running from Line 16 through Line 18. Line 16 pulls in the nontaxable portion from Part I, Line 17 handles any additional basis adjustment, and Line 18 is the taxable conversion amount. When Line 18 is greater than zero, that number goes to Form 1040, Line 4b.9Internal Revenue Service. Form 8606 (2025) Nondeductible IRAs Line 19 belongs to Part III, which covers Roth distributions, not conversions.10Internal Revenue Service. Instructions for Form 8606 (2025) – Section: Part III
Form 1040, Lines 4a and 4b
On Form 1040, put the gross figure from Box 1 of the 1099-R on Line 4a (IRA distributions). Put the taxable amount from Line 18 of Form 8606 on Line 4b. With no basis, the two lines match. With basis, Line 4b is smaller, reflecting the tax-free return of after-tax dollars.
Filing Form 8606 is mandatory in any year you convert, even if the conversion is entirely a return of basis.8Internal Revenue Service. Instructions for Form 8606 (2025) Skip it and the IRS has no record of your basis, which can lead them to tax the whole conversion. The statutory penalty for failing to file Form 8606 for nondeductible contributions is $50, waivable for reasonable cause, but the larger cost is losing track of basis that would reduce tax on future conversions and distributions.11Internal Revenue Service. 2025 Instructions for Form 8606 Nondeductible IRAs
Withholding Can Cost You Twice
When the custodian processes the conversion, they may offer to withhold federal income tax. The problem: withheld dollars never reach 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 amount for reporting. But the $22,000 sent to taxes is a distribution that was not rolled over. If you are under 59½, that $22,000 can trigger the 10% early withdrawal penalty on top of the income tax already owed.12Internal Revenue Service. Topic No. 557, Additional Tax on Early Distributions From Traditional and Roth IRAs The cleaner move is to decline withholding and pay the estimated tax from funds outside the retirement account, so every dollar of the conversion enters the Roth.
If the 1099-R Is Wrong
Custodians sometimes assign the wrong distribution code, leave Box 2a blank when it should be populated, or misstate the gross amount. Call the custodian first and ask for a corrected 1099-R (one with the “CORRECTED” box checked). Most obvious errors get fixed within a few weeks.
If you cannot get a corrected form by the end of February, call the IRS at 800-829-1040. The IRS will contact the custodian and send you Form 4852, a substitute for the incorrect 1099-R.13Internal Revenue Service. Form 4852 Substitute for Form W-2 or Form 1099-R You fill in the correct numbers, explain the steps you took to get a corrected form, and attach Form 4852 to your return. Filing with a known-wrong 1099-R and no substitute invites a mismatch notice.
Two Timing Rules That Affect What the Form Shows
A Roth conversion must be completed by December 31 of the tax year you want to report it. Unlike regular IRA contributions, there is no reach-back to April. A conversion processed on January 2 falls into the next tax year, and the December 31 IRA balance used in the pro-rata calculation must already reflect the conversion.
If you are 73 or older (75 starting in 2033 for those born in 1960 or later), you must take your required minimum distribution before converting anything else. The IRS treats the first dollars out of your IRA each year as satisfying the RMD, and RMDs cannot be converted.14Internal Revenue Service. Retirement Plans FAQs Regarding IRAs Convert the RMD by mistake and it becomes an ineligible rollover that has to come out of the Roth to avoid the 6% excess contribution penalty for every year it stays. In practice: take the RMD as a regular distribution first, then convert whatever additional amount you want. The RMD and the conversion appear on separate 1099-R forms or as separate entries, depending on the custodian.