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bAher
Level 1

1099-R 401K after tax contributions rollover to Roth IRA and IRA account

For the manually added Roth 1099-R, should box 7 distribution code be changed to H?

macuser_22
Level 15

1099-R 401K after tax contributions rollover to Roth IRA and IRA account


@bAher wrote:

For the manually added Roth 1099-R, should box 7 distribution code be changed to H?


Use the code that is on the 1099-R that you received.  If that WAS a code H then it cannot be split.   Only a code G can be split.

**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.**
JillS56
Expert Alumni

1099-R 401K after tax contributions rollover to Roth IRA and IRA account

No, you should not change the code in Box 7 of the 1099-R.  The Code should be reported as shown on the 1099-R.   If you feel the Code on your 1099-R Box 7 is incorrect, you need to contact the payee and ask them the question of whether it is the correct Code.   If it is found to be incorrect, they should issue you a corrected 1099-R with the correct Code.

 

@bAher 

 

 

 

dmertz
Level 15

1099-R 401K after tax contributions rollover to Roth IRA and IRA account

Code H is only for a rollover from a designated Roth account in an employer plan to a Roth IRA.  The code 7 indicates that the distribution was not from a designated Roth account.  Code 7 must be used.

LabRetriever
Level 2

1099-R 401K after tax contributions rollover to Roth IRA and IRA account

dmertz,

THANK YOU for this answer!  You Rock!  I'd kiss you through my screen if I could.

I transferred a single employer 401K distribution (in Fidelity) to both a personal Fidelity IRA and a Fidelity Roth IRA.  Most of the portion that went into the Roth IRA was after-tax payments I had made to my employer 401K.  Fidelity only sent me one 1099-R for this transaction instead of separate ones for the rollover to the IRA and Roth IRA.

 

I would venture this situation is a common occurrence, has driven me nuts today because I knew a small portion of the Roth IRA transfer was taxable (gain in the company 401-K on the after-tax contributions) that was listed in Box 2a.  Therefore, who should I complain to - Fidelity for not sending me separate 1099-Rs, or TurboTax for not asking the right questions that would have automatically told me what you have?  I think I'm going to complain to both entities for the grief this has created.

dmertz
Level 15

1099-R 401K after tax contributions rollover to Roth IRA and IRA account

Fidelity sending a single Form 1099-R was proper.  The instructions for Form 1099-R allow multiple distributions, or a single distribution sent to multiple destinations, from the same account reportable with the same code to be combined onto a single Form 1099-R.

 

 It's a TurboTax design choice that requires the Form 1099-R to be split.  Although the user interface could be designed to be able to accommodate all of the possible ways that the amounts could be split, that user interface overly complex for most users.  It's a tradeoff between accommodating the split to different destinations, overburdening the majority of users who do partial rollovers or conversions and having to provide different algorithms for direct rollovers, indirect rollovers, employer plans and IRAs.  If TurboTax was to be modified to be able to accommodate this scenario with the entry of a single Form 1099-R, in addition to asking how much of the distribution was directly rolled over to each type of destination account, TurboTax would have to ask how much of the after-tax basis to allocate to each type of destination account.  There are numerous areas in TurboTax where TurboTax requires splitting of forms to accommodate their entry.

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