1099-Q Taxes Due for Trustee to Trustee Transfer

[BFTWatts]

Why do I have to pay taxes on a Trustee to Trustee Transfer for a Qualified Education Plan? All I did was rollover our account balance to a different plan and now it is being added to my earnings with a sizable tax bill. We did not withdraw our use any of the money for educational expenses. 

[Hal_Al]

You answered something wrong in the interview.  There is a direct question for a transfer situation.

Alternatively, just don't enter the 1099-Q, in TurboTax.  

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 

When none of the distribution is taxable, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records. The worksheet is not sent to the IRS.

[BFTWatts]

Thank you @Hal_Al. That is what I was leaning towards too, but I have answered the interview questions every way possible while still being honest, including checking and un-checking the Trustee to Trustee box. The only thing that makes a difference is changing the "Recipient's Name" to someone other than me. But Turbo Tax tells me to "Be sure to Choose the Recipient as shown on the actual 1099-Q.", which is me. Should I be listed as the Recipient on the 1099-Q or did someone make a mistake when the processed the transfer between accounts?

[sshahid]

Hi @Hal_Al , is there a reason my post is being ignored? Just wondering because I’m not getting any replies!

[Hal_Al]

@sshahid 

This is a user to user forum. Your question (https://ttlc.intuit.com/community/college-education/discussion/re-us-citizen-doing-a-full-time-phd-p...) involves issues that fewer participants are knowledgeable about. 

[sshahid]

@Hal_Al - thanks for your reply, I'm assuming you're not able to answer my concern either. 😣

[Hal_Al]

@BFTWatts 

I don't know that for a fact.  But it makes sense to me that the owner of the plan would be the recipient, in the case of a trustee to trustee transfer. 

I would think it's important to leave the trustee to trustee box checked, at the 1099-Q screen. 

[Carl]

If you work back through the interview you'll find you answered a question wrong. Most likely, on the screen pictured below.