How is a direct rollover from my 401(k) (TSP) account to a new IRA (not a ROTH) TAXABLE?

Forum|Forum|3 months ago
April 14, 2026
3 replies
90 views

I closed my 401k this year and rolled it over into an IRA managed by my bank. I didn't expect this to be taxable. If the laws have changed, please tell me.

I followed the recommendations on the community (see https://ttlc.intuit.com/community/retirement/discussion/why-is-turbo-tax-treating-our-401k-rollover-to-an-ira-as-income-because-of-this-we-don-t-qualify-for/00/3775919) but the taxable amount is the same as the Gross distribution.

I checked my 1099-R, box 2a shows no taxable amount, box 7 shows 4G and the IRA box is not checked. If I don't figure this out, it will cost me THOUSANDS of dollars. PLEASE HELP!

followed your previous instructions

VolvoGirl

Level 15

Code G is for direct transfer. But code 4 is for death. Did you inherit the 401k from a spouse? @dmertz

MaryK4

Level 15

You must go back to your 1099-R summary screen in TurboTax, edit this specific TSP 1099-R, and proceed through the interview very carefully.

Look for the "What Did You Do With The Money?" Screen TurboTax will present a list of choices like:

You must select "I rolled it over into another qualified plan or IRA". If you select any other option (including "I cashed it out," which some users choose because the account was technically "closed"), the software will treat the entire amount as taxable ordinary income.

You said it has Code 4 for Box 7 - this is for an inherited distribution. Is this correct?

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ebarwick1Author

Level 2

I inherited the tsp account from my husband when he died in 2015. Is that the problem?

dmertz

Level 15

Nothing about the information provided suggests that TurboTax would treat this as anything other than nontaxable income. If it's being included on Form 1040 line 5a but is not being included on line 5b, it's not being taxed. I don't think it's possible for TurboTax to treat a code-G Form 1099-R with $0 in box 2a as being taxable.

Make sure that box 2a is not blank. it should contain a zero.