If the money was directly rolled over from the 401(k) to a traditional IRA, box 7 of the 1099-R will have code "G", and TurboTax will include the distribution on your return but the taxable amount will be zero. However, if you took the money out of your 401(k) and later put it into a traditional IRA yourself, there is no code to indicate that the money was rolled over. Instead, the box 7 code will list something else, for example, a "1" for an early distribution. You'll have to indicate during the tax interview that the money was rolled over into an IRA.
To enter an indirect rollover in TurboTax Online:
- Continue your return in TurboTax Online.(If your return isn't open, you'll need to sign in and click Take me to my return.)
- Click Tax Tools (lower left side of your screen).
- Click Tools.
- Click Topic Search.
- In the I'm looking for: box, type 1099-r.
- In the results box, highlight 1099-r and click GO.
- You'll land on Your 1099-R, which asks Did you have any of these types of income in 20xx? Select Yes, then click Continue. (If you've already entered the 1099-R, you'll land on Your 1099-R Entries instead. Click Continue to proceed.)
- Follow the prompts to either import or manually enter your 1099-R and finish the interview, paying careful attention to the rollover questions. When asked what you did with the money, select "I moved the money to another retirement account (or returned it to the same retirement account)". Then you'll be able to indicate if you rolled over all or part of the funds or converted any of it to a Roth IRA.
For more information, please see What's the difference between a direct vs. an indirect rollover?
