In 2019 I rolled a long-standing Roth 401k into a new Roth IRA and withdrew the funds. I had the investment company withhold 10%, thinking that would cover or more than cover my maximum penalty. After entering the 1099-R into TurboTax, it shows I owe a very large sum in taxes still. A few questions:
- Is this in error or are these circumstances under which the funds are treated as new income that can be taxed again?
- Does the 10% penalty apply to the entirety of the funds, or just the portion which was earnings in the 401k years and in the IRA after transfer?
- Should the investment company (both accounts were with the same company) have told me, or be able to tell me, how much is true contributions vs. earnings?
- Is there somewhere in TurboTax where I need to enter additional information to indicate the portion of the funds which has already been taxed?
