1099-R

[user17714484965]

I prepared my 2025 Federal and State income taxes using desktop TurboTax Deluxe, and I have a question about retirement income (1099-R).

In 2025 I rolled over my entire 401(k) into a regular IRA at the same institution (not a taxable event). In a separate transaction in 2025, I transferred a portion of that regular IRA into a Roth IRA at that institution (a taxable event).

The 1099-R I received combined the two transactions and reflected the total 401(k) rollover in box 1 (not all taxable), and the Roth transfer in box 2a (taxable).

I entered the 1099-R information carefully and accurately into TurboTax, but the software did not include the Roth transfer in my taxable income.

My question is,

(1) is there an error in the TurboTax software,

(2) is there an error in the 1099-R, or

(3) did I enter the information incorrectly?

Unfortunately I've already filed, so an amendment may be necessary.

[MaxA1]

Responses to your questions:

1. There's no known error in the software.
2. Based on the info provided, the 1099-R seems fine.  The distribution code might be a factor.
3. This may be a possibility.  TurboTax prompts questions that need to be answered carefully since they may affect how things get reported on the tax return.

If your tax return doesn't show the ROTH conversion amount as taxable income, then you may indeed want to consider amending. 

[user17714484965]

I am confident there's an error in the 2025 TurboTax Deluxe desktop software:

- I entered two 1099-R forms, one for pension distribution (all taxable) and a second form for a direct rollover from a 401(k) to an IRA (box 7 code G, non-taxable).

- the second 1099-R also reported a direct rollover from the same IRA into a Roth IRA and correctly reported that amount in box 2a (taxable).

- TurboTax included the pension distribution on 1040 line 5b (taxable amount) from the first 1099-R, but did not add the taxable amount from box 2a on the second 1099-R.

This is a serious problem. I've already submitted (filed) my taxes and now must amend the return, but I can't find a way to override line 5a on form 1040 with the correct total. What should I do?

[user17714484965]

Sorry, I tried to override 1040 lines 4a and 4b with the taxable amount from box 2a of the second 1099-R (it's blank) -- not line 5a.

[VolvoGirl]

I don't understand why you got a 1099R from the 401k for both the rollover and conversion?  If you converted from the IRA to ROTH IRA  you should be getting a 1099R from the IRA, it should not included on the 401k 1099R account again.  Something is wrong.  Better check with both the 401k plan and IRA plan.      @dmertz 

[dmertz]

"In 2025 I rolled over my entire 401(k) into a regular IRA at the same institution (not a taxable event). In a separate transaction in 2025, I transferred a portion of that regular IRA into a Roth IRA at that institution (a taxable event).

The 1099-R I received combined the two transactions and reflected the total 401(k) rollover in box 1 (not all taxable), and the Roth transfer in box 2a (taxable)."

That's impossible.  The 401(k) and the IRA are separate accounts, so the payer must issue a separate Form 1099-R with respect to each of these accounts.

What the Form 1099-R likely represents is a rollover of a portion of the 401(k) to the traditional IRA and another portion of the 401(k) directly from the 401(k) to the Roth IRA, both portions reported on an single Form 1099-R with code G in box 7 and the IRA/SEP/SIMPLE box not marked.  Given that, I suspect that the  entire amount distributed from the 401(k) was mistakenly deposited into the traditional IRA rather than being  properly split to the the separate destination accounts.  If the entire amount distributed from the 401(k) was deposited into the traditional IRA, it would seem that the financial institution made an error either in making the transfers or in how they prepared the Form 1099-R.

Did you receive a Form 1099-R with code 1, 2 or 7 in box 7 with the IRA/SEP/SIMPLE box marked?  If not, then you are mistaken in that there was actually no subsequent Roth conversion from the traditional IRA.  Because TurboTax is limited in reporting only a single type of destination account for a code-G rollover, the Form 1099-R needs to be split into two, one for the portion rolled over from the 401(k) to the traditional IRA, and another for the portion rolled directly from the 401(k) to the Roth IRA.

[user17714484965]

Maybe I can explain my observation better.

I received one 1099-R from a financial institution that reported both a 401(k) --> IRA rollover and an IRA --> Roth IRA distribution (separate transactions, same institution). The IRA --> Roth IRA distribution was reported in box 2a on the 1099-R (taxable) with Distribution Code G in box 7 (direct rollover). I believe the 1099-R is accurate.

I carefully entered the 1099-R info into TurboTax Deluxe for Windows desktop, but the taxable amount in box 2a of the 1099-R did not transfer to federal form 1040 lines 4a and 4b (they remain blank).

I have revisited this many times to look for any errors I made and the result is the same. I believe there is an error in TurboTax underreporting my income (but I'm willing to be wrong).

[dmertz]

The IRA --> Roth IRA distribution was reported in box 2a on the 1099-R (taxable) with Distribution Code G in box 7 (direct rollover). 

My reply still stands.  A nonzero amount in box 2a of a code-G Form 1099-R represents an amount rolled over directly from the 401(k) to a Roth IRA.  With no Form 1099-R with code 1, 2 or 7 and the IRA/SEP/SIMPLE box marked, there was no distribution from an IRA.

[user17714484965]

No, the 401(k) --> traditional IRA rollover was one transaction. A distribution from the same traditional IRA to a Roth IRA was a separate transaction. Both transactions were reported on one 1099-R (same institution). That 1099-R correctly reported the IRA --> Roth IRA as taxable in box 2a.

I entered that 1099-R into TurboTax, but the taxable amount in box 2a did not transfer to lines 4a and 4b of the federal 1040.

[dmertz]

You'll have to ask the 401(k) plan for an explanation because what they reported is what I have described, not what you have described.

[user17714484965]

I will check with the institution about the 1099-R, thank you. But I still believe the taxable amount in box 2a should have transferred to federal 1040 lines 4a and 4b regardless of whether the distribution came from a 401(k) or a traditional IRA (any tax-advantaged account into a Roth IRA).

[VolvoGirl]

A 1099R can only be from 1 kind of plan, either from a 401k or  from a IRA.  And because IRA goes on 1040 line 4 and 401k go on line 5.  A 1099R from a IRA will have the little IRA box checked next to box 7.   You can't combine them on a single 1099R.  See if you have any other 1099R forms you are missing in your paperwork.   Did they send you an actual IRS form 1099R  or did the plan just send a letter with the 1099R info and not on the actual form?  

[user17714484965]

It was on the official IRS 1099-R form:

• Box 2a Taxable amount: non-zero
• Box 2b Total distribution box: checked
• Box 7 Distribution code(s): G
• IRA/SEP/Simple box: not checked

I was incorrect earlier, sorry -- the source of the two transactions was the same 401(k) at the same institution. But the 401(k) --> Roth IRA conversion and the 401(k) --> traditional IRA rollover were different transactions with different destinations. 

I also didn't mention that I had another 1099-R for a pension distribution (different institution). The 401(k) --> Roth IRA conversion and pension distribution were both taxable and should have been combined on Federal 1040, line 5b. TurboTax only entered the pension distribution amount on 5b -- the taxable amount from the 401(k) --> Roth IRA conversion (box 2a on the 1099-R) was not transferred to my 1040. I believe this is a TurboTax limitation.

So I emailed the institution today that sent me the single 1099-R for the two 401(k) transactions and asked if they could send me a 1099-R for each transaction separately. I'm hoping that will allow TurboTax to combine the Roth conversion with the pension distribution on 1040 line 5b.

Thank you for your help. 

[dmertz]

" the source of the two transactions was the same 401(k) at the same institution. "

Yes, that's what I was saying is indicated by the Form 1099-R.

The financial institution is going to refuse to send you separate Forms 1099-R because they reported correctly on the one that you already have.   As I mentioned earlier, due to TurboTax's limitations, you yourself must split the form into two to be entered separately into TurboTax, one for the portion rolled over to the traditional IRA and the other for the portion rolled over to the Roth IRA.  It seems that you reported the entire amount of this particular Form 1099-R as being rolled over to the traditional IRA, causing TurboTax to exclude it Form line 5b entirely.

[user17714484965]

Thank you dmertz. 

The traditional IRS rollover from my 401(k) was the entire remaining balance, hence the Total distribution check in 2b on the 1099-R. But that was after the 401(k) --> Roth IRA conversion, a separate transaction on the same 1099-R.

If the institution won't separate the two transactions, I'll try your recommendation to split the form into two myself in TurboTax.

Thanks again.