A 401(k) distribution is fully taxable, including the part use to pay the tax since it was part of the distribution. A rollover to a Traditional IRA would not be taxable since both the 401(k) and the Traditional IRA consist of before-tax money. Since a Roth is after-tax money, the tax must be paid.
The entire 50K will be taxed at your marginal tax rate. The $10K withholding (in box 4 on the 1099-R) will be added to all other withholding on line 64 on the 1040 form. Depending on your tax bracket the 20% withhold may or may not be enough to pay the tax.
Enter a 1099-R here:
Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).
OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.
Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.
If this was a IRA rollover or conversion, answer the question that you moved the money to another retirement account (can be the same account). The screen will open up with choices of where it was moved.
It will show as income on the summary screen which shows gross income, not taxable income.
The income will be reported on line 15a on the 1040 form.
The taxable amount will go on line 15b.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
