1099-R Distribution Code for Roth Conversion

[dminches]

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 It is my understanding that I should be taxed on the amount withdrawn from the 401(k).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?

[leeloo]

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?

[dminches]

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]

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.

___________________________

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.

[dminches]

Thanks for the reply.  I need to use the questionnaire more.  It seems to cover things well.

[SteamTrain]

Ohhhh, yeah...for Desktop software, we always recommend using the interview...and switching to Forms Mode only for fixing occasional things that happen to go wrong.....or checking to make sure $$ went into the right spot.