Retirement tax questions

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@icky0 wrote:

This IS an error in how TurboTax calculates form 8915-e. If you read the instructions for that form carefully, they state that you are to use the amount in box 1 of the 1099-R. They explicitly say box 1 in the instructions. TurboTax can't handle an empty box 2, but they should be able to.

 

Update: I just loaded TurboTax again and they have fixed the error. Now if you have a blank box 2a on your 1099-R the system correctly calculates your distribution from the data in box 1.

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The instructions say: " box 2b is checked, the issuer of Form 1099-R may not have had all the facts needed to figure the taxable amount. You may want to get Pub. 575, Pension and Annuity Income, to help figure your taxable amount."

If box 2b is checked (it should NOT be for a 401(k)) then the 8915-E instructions sat that *you* must determine the taxable amount.    While it does not explicitly state that *you* must enter that into box 2a - bo0x 2a is were the taxable amount goes.

A blank box 2a and 2b checked WILL make all of box 2 taxable and it has done so for years - that is not new due to the 8915-E form - that is how the 1099-R works.   A blank box 2a is not acceptable and the issuer of the 1099-R is responsible for putting the correct amount into box 2a. 

ALL 401(k) distributions MUST report the cost basis in the 1099-R form - either a zero cost basis in which case box 2a and box 1 will be the same, or in box 5 and box 2a will be the box 1 amount minus box 5.

It is very rare for an employer plan to not know the correct basis, but if they actually do not know and the plan refuses to issue a correct 1099-R then you can file a substitute 1099-R with the correct amount in box 5 and 2a (all else the same as origonal).  Then  enter into the required explanation (that TurboTax will ask for) the steps you took to get the plan administrator to correct the 1099-R and they refused to do so.