TSP CORRECTED 1099R and only Box 5 changed

[Samuel R]

I filed my 2023 and got my refund. Now my TSP account sent me a CORRECTED 1099R and only Box 5 changed. The corrected value is half of the original 1099R. Do I need to refile my tax return for 2023?

[SteamTrain]

Depends......was box 2a of the original 1099-R, lower than box 1 by the corrected box 5 amount? 

...or was it lower by the original box 5 amount?

IF the Original 1099-R you entered, already had box 2a lower than box 1 by the corrected amount, then you likely don't have to do anything...other than keep those forms in case the IRS has a question later.

IF box 2a was reported properly on the original 1099-R, you should also check your 1040 line 5b vs line 5a to make sure only the 2a  value went into 5b (if you had other retirement distributions...those also add into lines 5a & 5b so you may have some math to do)

[DaveF1006]

It depends. just to recap what is mentioned above. If the amount in Box 5 changes, this would affect the taxable amount reported in Box 2A.  Let me explain how this works.

Your cost basis ,which is the amount you paid into the plan, is reported in Box 5. Your taxable amount is determined in the following manner. 

1. Determine the cost basis.  This is the amount reported in Box 5.
2. Divide your cost basis by the accumulation value to get the exclusion ratio. the accumulation value is the earnings that the annuity has earned throughout the years.
3. Multiply your monthly payout by the exclusion ratio.
4. Subtract the excluded portion from the total payout.
5. What remains is the taxable amount of the annuity.

If Box 5 changes, this would effect the taxable amount of the annuity. You do not need to determine this on your own because Turbo Tax determines this by asking a series of questions in its interview to accurately calculate the taxable portion of your annuity. 

Based on this, I advise to amend your return, because the change in Box 5 will affect the taxable portion of your annuity. More than likely, Box 2A will be blank in both 1099R's because the taxable amount would need to be determined by a method I described above. If not, and if the amounts are different, then the issuer of the 1099R may have accurately calculated the taxable amounts based from the basis of the annuity. 

In any case, I would advise to amend your return to reflect the change.

[SteamTrain]

@DaveF1006   @Samuel R 

True, but it really depends on what was entered in box 2a for the 1099-R on the original tax return, and whether the correct taxable amount transferred to the form 1040.

My yearly 401k distribution (equivalent to a TSP), the 1099-R always has box 2a already filled in with a value $109 lower than box 1, (with box 5 = $109) since I had some after tax contributions to my 401k.

__________

Checking a test file with a 1099-R, where box 2a was lower by $2222, TTX didn't complain if I put $4444 in box 5...and...the 2,222-lower box 2a amount was transferred to the form 1040, without dealing with the $,444 value at all.   So the fact that the original box 5 was 2x higher than the reduction showing in box 2a made no difference, and the taxable amount reported in box 2a remained  (at least on my desktop software).

So...in thus OP's situation, when he entered the original 1099-R, was that original's drop form box 1-to-box2a equal to that original box 5a value, or was the drop actually half his original box 5a value?

Or...was box 2a empty on the original....in which case, perhaps the entire box 5 value was used to reduce the box 1 value...then an amended tax return would be needed.

[Samuel R]

My box 2a is 0 (zero) in both forms, my box 1 is the same in both forms. Box 5 drop to a value = entry in Box 1 in the corrected form.  If I read your response correctly, then I do not need to re-file my tax return....right?

[SteamTrain]

@Samuel R 

Sorry.... Confused about what you are saying now.

1) What are the exact values in boxes 1, 2a and 5 in both forms, as well as the box 7 code(s) for each?

ANNND beyond that

2) What did you do with the distribution? 

....2a) Keep it, either in your bank or a personal non-Retirment account?

.........2b) Or roll over to some kind of IRA or other Retirment account?  (A Roth IRA perhaps?)

____

[Samuel R]

                    Original TSP 1099R            Corrected TSP 1099R

Box 1  $28,625.15                                 $28,625.15

Box 2a $0.00                                         $0.00

Box 5  $53,391.20                                 $26,695.60

Box 7  H                                                H

I had a TSP ROTH account of  $28,625.15    I did a ROTH to ROTH rollover to my private ROTH with Schwab. So all of the money was ROTH and none was cashed out.

After I filed my tax return and got my refund, then TSP sent me the CORREDTED 1099R. Do I need to refile my tax return?

THANK YOU MUCH

[SteamTrain]

@Samuel R 

Ahhh, you didn't mention it as coming from a ROTH TSP.....you just said TSP, which is not the same.

(Edited)  SO.......others have figured out why it was listed that way,,,,, and what to do next in the posts below.

[DaveF1006]

The difference of $1925 is accumulated earnings earned in the account. The earnings  may be taxable if you took a distribution. Since this is a rollover, the earnings are not taxable.

You do not need to amend your return but you need to keep a copy of your corrected 1099R.  Box 5 is the basis or the amount you paid for the Roth and this information is needed in case if you take a distribution from your Roth. If this is the case, a form 8606 is generated to determine if your earnings are taxable distributions. When you take the distribution and it's reported on a 1099R, you will be asked what the basis in your Roth account is prior to the distribution. Your earnings are only taxable if:

1. If you take a distribution from your Roth IRA  before you reach age 59½
2. and if the Roth IRA account is less than five years old,

If these two conditions, the earnings may be subject to taxes and penalties if you take a distribution.

@Samuel R 

[Samuel R]

Thank you all very much. I now know what I need to do. Have a nice day.

[dmertz · Accepted solution]

This doesn't affect your filed tax return since the rollover is still nontaxable.  What does change is the amount of contribution basis that TurboTax recorded on the IRA Information Worksheet as the amount of basis acquired from the Roth TSP.  You can correct this by amending in TurboTax, but just not sending the amendment to the IRS.

The alternative is to not bother changing it in 2023 TurboTax and just make the correction to your basis in 2024 TurboTax after transferring your 2023 tax file in to start your 2024 tax return, but that will require that you remember to make the correction next year when preparing your 2024 tax return.