1099-R on a 401K Rollover question

[kunanrod]

In December, 2024, I rolled over my traditional 401K to my brokerage IRA accounts. Since I have both before tax contribution and after contribution in my 401K, so the 401K administrator wired two separate rollover transactions, one to my regular IRA and the other one to my ROTH IRA.
I discovered immediately that they rolled over the before tax earning from the after-tax contribution to ROTH as well, so I requested the brokerage firm to correct the rollover error as the 401K administrator stated they will not able to do since it was wired. From the brokerage perspective, none of them are taxable events. However, on my 1099-R, the earning of the after-tax contribution is taxable. When I contacted my 401K administrator, they will not make a change on 1099-R because they said they do not know what happened after the rollover. Please advise what is the proper way to report this on my 2024 tax. Thank you.
Box 1 (Gross distribution) – sum of before tax contribution + after tax contribution + before tax earning from the after-tax contribution
Box 2a (Taxable amount) – before tax earning from the after-tax contribution
Box 2b – Total distribution checked.
Box 5 – after tax contribution amount
Box 7 – G
Box 15 – State
Box 16 – before tax earning from the after-tax contribution

[dmertz]

To accommodate TurboTax's limitations on being able to handle this distribution being split to the two different accounts, you must split the original Form 1099-R into two for entry into TurboTax.

It's a bit unusual that the earnings attributable to the after-tax contributions were rolled over to the Roth IRA, indicated by the nonzero taxable amount inbox 2a, but it is what it is.  That cannot be undone.  For the portion rolled over to the Roth IRA, the 1099-R form for that portion will have in box 1 the sum of the box 2a and box 5 amounts, the box 2a amount in box 2a and the box 5 amount in box 5.  The 1099-R form for the portion rolled over to the traditional IRA will have in box 1 the amount from box 1 of the original form minus the amounts from boxes 2a and 5, and zeros in boxes 2a and 5.

This splitting of the original form will be transparent to the IRS because with no tax withholding, the details of these 1099-R forms entered into TurboTax will not  be included in your e-filing.  Only the result on Form 1040 lines 5a and 5b will be present in your tax return.  Line 5a will include the entire gross amount and line 5b will include only the taxable amount from box 2a.   TurboTax will also include the ROLLOVER notation next to the line.

[kunanrod]

Thank you for providing a clear instruction on splitting the 1099-R. I have since contacted the 401 financial institution and they agreed to provide two 1099-R. One for the before tax contribution and the other one for the after tax contribution plus its earnings.

I am not clear on how to handle the earned income. I discovered the rollover mistake immediately when I worked with the 401K financial institution on the phone but the representative said it was wired, so they cannot correct it. I also had my brokage representative on the phone, so I  asked my brokage to reroute it to my regular IRA and they did it as soon as they received the money. It did not stay in my ROTH account, so it should be an non-taxable event.  You indicated that this cannot be undone. If I pay tax on the earned income this year, then I will have an already taxed money in a regular IRA and pay tax again when I take it out. Please advise. Thank you.