@Val18 wrote:
I couldn't get Turbo tax to acknowledge that the withheld tax portion was taxable at all, no tax was charged on the 1099 R and no penalty was assessed.
For example 1099R Gross amount was $3,500, tax withheld was $600, the actual rollover amount was net the tax of $2,900 to the new IRA. Box 2A showed the full $3,500. Box 7 showed "G" as a direct rollover.
No Roth involved at all, It went from an employee 401k plan to an individual retirement account.
So Turbo tax did not tax the $600 or put a 10% penalty on the $600 either.
I was wondering why Turbo tax did not pick this up.
Hold on - there is a problem there.
A 1999-R with a code G and a taxable amount in box 2a is NOT a direct rollover to a Traditional IRA which is totally tax free. The box 2a would be a zero and no tax would have been withheld.
What you described is a rollover conversion to a Roth IRA that does have the box 1 amount also in box 2a because it is taxable.
You need to check with the receiving bank to see just what type of account the money is actually in.
Why would you have tax withheld for a totally, not taxable, rollover to a Traditional IRA?
If actually a Roth IRA then in the 1099-R interview you answer YES to the rollover to a Roth IRA question.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
