The last time I did a conversion to a Roth it involved Vanguard Mutual Fund Accounts. This time (2022) it involved Vanguard Brokerage Accounts. Don't know if that is the reason for the difference in the 1099-R or if the form itself has changed over time. Previously the form ended with Line 14. But this time the form shows a Line 16 which is labeled "State Distribution" with the following explanation:

Lines 14-19. If state or local income tax was withheld from the distribution, lines 16 and 19 may
show the part of the distribution subject to state and/or local tax.

Line 14 labeled "State Tax withheld" is blank, which it should be blank because no state tax was withheld.

But Line 16 "State Distribution" shows the total amount of the conversion.

Why is Vanguard showing the total distribution on line 16 when no state tax was withheld? Shouldn't line 16 be blank?

Do I need to get Vanguard to correct this, so that the State does not misinterpret Line 16? None of this distribution is subject to State tax and no State tax was withheld, so I don't understand why Vanguard included Line 16.

Thanks for any insight on what Vanguard is doing. This is a "normal distribution" code 7 with no complications, unless Vanguard just created one.

My question has more to do with whether or not Vanguard completed the form appropriately. If anyone else has seen their Vanguard Brokerage 1099-R with a Roth Conversion, can you tell me if Vanguard is doing this for all Roth conversions whether or not state tax was withheld? Thanks.

water2357 wrote: ↑Tue Jan 10, 2023 7:43 pm
My question has more to do with whether or not Vanguard completed the form appropriately. If anyone else has seen their Vanguard Brokerage 1099-R with a Roth Conversion, can you tell me if Vanguard is doing this for all Roth conversions whether or not state tax was withheld? Thanks.

It's fine. I think a lot of states ignore this field when the 1099-R is filed by the payor. Typically a state tax return start with the Federal AGI and then all the weird adjustments are made to arrive at the state AGI. Then the tax is calculated.

I see this field filled in for many pension and IRA distributions with no tax W/H.

When you discover that you are riding a dead horse, the best strategy is to dismount.

My spouse has two 1099-R from Vanguard: (1) Vanguard Brokerage with has Line 16 the full conversion amount and (2) Vanguard Mutual Fund where Box 16 is blank. Does that answer your question? As I already noted: I ignored Line/Box 14, 15, and 16 because we do not pay state income taxes (even though I file a NY State income tax return as a non-resident).

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water2357 wrote: ↑Tue Jan 10, 2023 7:43 pm
My question has more to do with whether or not Vanguard completed the form appropriately. If anyone else has seen their Vanguard Brokerage 1099-R with a Roth Conversion, can you tell me if Vanguard is doing this for all Roth conversions whether or not state tax was withheld? Thanks.

Exactly the same for mine. First time for me doing a conversion. It did not change my state tax result for NJ.

water2357 wrote: ↑Tue Jan 10, 2023 7:43 pm
My question has more to do with whether or not Vanguard completed the form appropriately. If anyone else has seen their Vanguard Brokerage 1099-R with a Roth Conversion, can you tell me if Vanguard is doing this for all Roth conversions whether or not state tax was withheld? Thanks.

I just downloaded mine, but it has the State distribution empty. Both Box 15 and 16 are empty.
Also my first year after the transfer to the brokerage platform (not impressed thus far).

So I've done this with vanguard for years. This is the first year I see anything under 16 filled out (14 and 15 are still blank). I'm considering just leaving it bank for 16 when I enter it in turbo tax but also looking for input.