dmertz
Level 15

Retirement tax questions

If the amount in box 2a of the Form 1099-R provided by the payer is zero, you apparently told the TSP that your rollover was to go entirely to a traditional IRA.  A proper direct rollover should make the payer be a specific IRA for your benefit, making it generally impermissible for funds to be diverted to a different IRA, but such diversions of funds do happen, as appears to be the case here.  Presumably the TSP initiated the transaction as you requested, so there would be no reason to expect them to change the Form 1099-R to include the taxable amount in box 2a if it's not already there.

 

Since there were two different destinations for the rollover, you must split the code G Form 1099-R into two, one for the portion rolled over to the traditional IRA and the other for the portion rolled over to the Roth IRA.  TurboTax is otherwise incapable of handling this common situation.  You prepare the split forms to sum to the same amounts as are in the respective boxes of the original Form 1099-R.  That's slightly problematic if the amount in box 2a of the original is zero since TurboTax will normally treat this as nontaxable even if you indicate that the rollover was to a Roth IRA.  In this case for the portion going to the Roth IRA you can put a zero in box 5 to indicate that there is not after-tax basis included in this and force TurboTax to treat it as taxable.  I doubt that you would need to provide any explanation to the IRS, but be prepared to do so if the IRS does question why you are reporting a portion of the distribution as taxable.

 

Of course if the original Form 1099-R correctly shows in box 2a the amount that went to the Roth IRA, just make sure that the box 2a amount shows up entirely on the split Form 1099-R that is for the portion that went to the Roth IRA.