Several people have had the same issue and I'm not sure that the solution that I have found reading the answers is the best/right answer.
We rolled a 401k, which had both after tax and pre-tax funds in it, into an IRA and a Roth IRA. We received one 1099 that covered this transaction. When the figures are entered into TurboTax, for some reason it is calculating that we need to pay tax on the part of the distribution that rolled into the IRA, even though line 2a (taxable amount) is $0.00 and box 7 has G in it stating that it is a direct rollover and rollover contribution.
The solution that I found on this forum suggested that the only way to solve this problem is to divide the distribution into two 1099-Rs. The institution that sent the 1099-R says that it is correct and we should not have to divide it up. Is there a different way to solve this problem? Is it OK to divide the 1099-R into two?
I thought maybe the code(s) on line 7 should be G & H, since part went to an IRA and part went to a Roth IRA, but changing that on the form, although it took away wrongly applied taxes, caused a flag by TurboTax.
