Betterment is wrong. They are required by law to provide a 1099-R that reports a direct rollover from a IRA to an employer plan.
See: https://www.irs.gov/pub/irs-pdf/i1099r.pdf page 6 [highlights added]
Transfers
Generally, do not report a transfer between trustees or issuers that involves no payment or distribution of funds to the participant, including a trustee-to-trustee transfer from one IRA to another IRA, valid transfers from one section 403(b) plan in accordance with paragraphs 1 through 3 of Regulations section 1.403(b)-10(b), or for the purchase of permissive service credit under section 403(b)(13) or section 457(e)(17) in accordance with paragraph 4 of Regulations section 1.403(b)-10(b) and Regulations section 1.457-10(b)(8). However, you must report:
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Recharacterized IRA contributions;
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Roth IRA conversions;
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Direct rollovers from qualified plans, section 403(b) plans, or governmental section 457(b) plans, including any direct rollovers from such plans that are IRRs or are qualified rollover contributions described in section 408A(e); and
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Direct payments from IRAs to accepting employer plans.
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**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.**
