DavidD66
Expert Alumni

Retirement tax questions

Distributions from a Roth 401(k) are not permitted to be rolled over to a traditional IRA.  What you did was take a distribution from your Roth 401(k) the earnings portion of which was actually taxable.  You then made a contribution to your traditional IRA for the amount of the distribution.  It was not a rollover.

 

Since you did this in 2023 I don't believe there is any way to correct it so that you accomplish what you intended.  You can reach out to the Traditional IRA custodian and explain that instead of a direct rollover what you did constituted a regular contribution, not a rollover, and see if they will reclassify the money you withdrew in excess of any allowable contribution as as a return of excess contribution.  

 

The only other thing you can do to minimize the tax that you're going to have to pay on your distribution is to enter the amount of your Roth 401(k) basis as after tax contributions to your Traditional IRA.  There is a question after you enter your Form 1099-R about prior year non-deductible contributions.  That will reduce the amount of that is taxable.   

 

 

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