I received two 1099-Rs from Vanguard for rollovers from two different 401(k) accounts. Both were direct rollovers, and none of the funds were distributed to me.
• The first 1099-R was for a rollover split between a traditional IRA and a Roth IRA.
• The second 1099-R was for a full rollover into a traditional IRA.
In both forms, the IRA/SEP/SIMPLE box is not checked, which is consistent with IRS instructions — that box should only be checked when the distribution is from an IRA, not a 401(k).
Here’s where TurboTax behaves oddly:
If I leave the IRA/SEP/SIMPLE box unchecked (as it appears on the form), TurboTax treats the entire amount as taxable, significantly increasing my tax owed.
But if I check the IRA/SEP/SIMPLE box, TurboTax:
• Reduces the tax liability to zero,
• Moves the amount to Line 4a (IRA distributions) with $0 in 4b, and
• Labels it as a ROLLOVER.
It also gives me a warning:
“If this is a Roth conversion with code G, it should have code 1, 2, or 7 instead.”
Later, it asks me to uncheck the ‘Full Roth conversion’ checkbox — which I did — and then it lets me proceed with zero tax due.
So I’m confused:
• TurboTax only gets the tax treatment right when I check a box that isn’t actually marked on the 1099-R.
• I don’t want to override the form in a way that conflicts with what the IRS received.
• The second 1099-R (which was a full rollover to a traditional IRA) did not cause this issue, so the problem seems limited to the case where part of the rollover went to a Roth IRA.
Has anyone else run into this? Is this a known TurboTax bug or is there a proper workaround?
