Carl
Level 15

Retirement tax questions

Typically, when doing a trustee-to-trustee transfer from one tax deferred retirement account to another tax deferred retirement account, a 1099-R is not issued and nothing needs to be reported. However, when you do something like transfer from a traditional 401(k) to a self-directed IRA, the 1099-R is required. You just enter the 1099-R exactly as printed. In later screens the program will ask you what you did with that money. If you indicate you "rolled it" to an IRA, then none of it will be taxable. If you indicate you rolled it to a ROTH IRA, then all of it will be taxable and no penalties will be assessed.

Also, if the issuer of the 1099-R shows any withholding on the amount, it's up to you to make up the difference for the withholding in the new account. Otherwise, that withholding is considered a taxable withdrawal that may be subject to the 10% penalty if the transaction occured before the qualified retirement age.