1099-R Distribution Code for Roth Conversion

Forum|Forum|3 years ago
January 13, 2023
1 reply
17 views

I converted some of my 401(k) into a Roth IRA. I received my 1099-R from Fidelity and it has a distribution code of G. When I enter this into Turbo Tax it treats it as a non-taxable event. It is my understanding that I should be taxed on the amount withdrawn from the 401(k). I have the same amount entered in both Box 1 and Box 2A.

Is the distribution code incorrect and should be 7 or is there an issue with Turbo Tax in that it isn't taxing the withdrawal amount?

user17750693608

Level 8

Yes, Code G indicates that this is a nontaxable rollover and that is what drives the program. Contact Fidelity and ask the reasoning for this code. Did you have any after-tax 401k amounts?

dminchesAuthor

Level 4

I did some research on line and G is the correct code. Further down in the 1099-R form there is a question which asks if the funds were rolled over into a Roth IRA. If you check that box it makes the rollover taxable. This is what happens if you go through the TurboTax questionnaire.

SteamTrain

Level 15

Yes, the G is correct for a direct transfer to either an IRA or a ROTH IRA.

.....but as you have seen, the follow-up questions have to be entered correctly in order for it to be treated properly, as to either as being taxable....or not.

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I had some after-tax contributions made to my 401k (before the Roth 401k existed), and my box 2a was always lower than box 1....such that only the box 2a value was taxed when I direct transferred to a Roth IRA for a couple years running. Fidelity transfer too. All handled OK in the software.

Tested again just now in 2022 Premier Desktop..still works OK.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*