After leaving an employer, my wife rolled her 401k into two IRAs. Her non-Roth portion of her 401k went into her traditional IRA and the Roth portion of her 401k went into a Roth IRA. We were told to do this so that she wouldn't be taxed on the rollover. She received two 1099-R. Both had an amount in Gross Distribution and $0 for taxable amount. Everything was entered correctly in TurboTax but when it asked the question if this 401k was rolled over into a Roth IRA and I answered "Yes", my $4,000 tax refund became $7,000 due. Obviously I did something wrong because why would I be charged $11,000 taxes when the taxable amount on the 1099-R was $0. Can anyone tell me where I went wrong?
