Error (I think) on 1099-R is causing me to not be taxed on traditional 403(b) to Roth IRA conversion. Do I need to get a new 1099-R?

Forum|Forum|7 years ago
June 1, 2019
4 replies
20 views

I wanted to convert a 403(b) to a Roth. I had the 403(b) place send the check to my IRA company for a traditional IRA. After the check arrived, I decided to have the IRA company put it directly into a Roth (instead of traditional) IRA. I believe the net result is that box 2a on my 1099-R (Taxable amount) is listed as 0, and 2b (Taxable amount not determined) is unchecked. So, I am not getting taxed on this distribution. Do I need to get this corrected at the 403(b) company, to send out a new 1099-R? I would love to correct this on the fly, but am assuming I cannot?I would sincerely appreciate any guidance on this.

TurboTax Deluxe Windows

Best answer by dmertz

The check should have been made payable to a traditional IRA for your benefit so that you would not have been able to divert the funds directly to a Roth IRA in disagreement with the Form 1099-R that the 403(b) would eventually be providing showing a zero in box 2a. However the fact that the money was deposited directly into a Roth IRA does mean that it qualifies as a direct rollover to a Roth IRA despite what the Form 1099-R is showing.

Given that the 403(b) did what you asked, they are unlikely to issue a corrected Form 1099-R showing the taxable amount in box 2a, but you should probably try to get them to correct it. If they decline to do so, you'll should submit a substitute Form 1099-R (Form 4852) showing the taxable amount in box 2a (the amount in box 1 minus any amount in box 5). This will require you to provide explanation and to paper-file by mail.

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Dan7Author

Level 2

I now understand Vanguard refers to this as a "mid-air conversion." The 403(b) place won't change the 1099-R, as they though it was going to a traditional IRA. So, I need to get TurboTax to allow me to add in the income somewhere, I think, without getting a new 1099-R.

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Dan7Author

Level 2

Thank you! TurboTax tells me if I file electronically, they will handle the explanation statement. If I mail, they say I need to attach. Since I will file electronically, I think I don't have to do anything more. Thank you so much for the help!

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dmertz

Level 15

My answer indicates that you'll need to tell TurboTax that you need to submit a substitute 1099-R. TurboTax will prompt for the required explanation statements that you'll include with your mailed tax return.

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dmertzAnswer

Level 15

The check should have been made payable to a traditional IRA for your benefit so that you would not have been able to divert the funds directly to a Roth IRA in disagreement with the Form 1099-R that the 403(b) would eventually be providing showing a zero in box 2a. However the fact that the money was deposited directly into a Roth IRA does mean that it qualifies as a direct rollover to a Roth IRA despite what the Form 1099-R is showing.

Given that the 403(b) did what you asked, they are unlikely to issue a corrected Form 1099-R showing the taxable amount in box 2a, but you should probably try to get them to correct it. If they decline to do so, you'll should submit a substitute Form 1099-R (Form 4852) showing the taxable amount in box 2a (the amount in box 1 minus any amount in box 5). This will require you to provide explanation and to paper-file by mail.

D

Dan7Author

Level 2

dmertz -- thank you for your reply. I see it now... I need to go to the enter a new 1099-R, and tell it I need to make a Substitute form. Thank you for getting me there!