Brief summary: I am 55 years old. I switched jobs and I rolled over my old employer 401k to my IRA with a check in the amount of $86000 in June 2020.
The amount I received was in error because old employer did not factor in that I was not fully vested. The amount I should have received was $47000
The rollover was $39,000 more than I was entitled to.
I was instructed to have my IRAreturn the overage amount to them. I contacted the The IRA company in October and they told me that they could only send me the check and the amount had to include current value of the $39000. Therefore, Fidelity sent me a check for $44,000 , which was $5000 above the requested amount. I never kept this money. I wrote a check to the old company 401k for the exact same amount, 44000.
My 1099-R from old company was for $86000 nothing taxable.
My 1099-R from my IRA has distribution of $44,000. Box 2a has value of $5000. which is taxable to me. I never kept the money and it was sent back to the old 401k.
Based on TurboTax, I have to pay $1700 in taxes and 10% penalties.
Do I have to pay this tax?
How do I configure my tax return so I do not have to taxes on money that I do not have? (returned to old company 401k)
