1099R - 401k Rollover error

Forum|Forum|5 years ago
April 12, 2021
1 reply
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Hi,

September of 2020, I rolled over 401k accounts from a former employer to my IRA accounts.

There was a mixup due to the fact that I actually had both a Regular 401k account and a Roth 401k account with this former employer.

I noticed about two days later that both the Regular and Roth 401k accounts were going to be deposited into my Roth IRA account. I tried to stop them from issuing the check, but they said it was too late to stop it.

I also called my account rep at the receiving brokerage to see if the Regular 401k deposit could be routed to the Regular existing IRA brokerage account instead of into the Roth IRA, but he said it had to be deposited as per the deposit instructions,

I got the 1099R for the Regular rollover with a distribution code of G, indicating that it was a direct rollover, but thanks to my account rep at the brokerage, he was able to get the brokerage to move the Regular 401k funds FROM the Roth IRA into the regular IRA, which would then make it a tax free transfer, the way it SHOULD have been, but I now have to deal with the fact that my 1099R says I had a taxable distribution.

In addition, because there are several firms dealing with rollovers from the former employer's 401k, I couldn't just get them to issue a corrected 1099R.

I did get the following though:

1) A letter from the former employer stating that the deposit "was reissued to the regular IRA account" (Although they didn't reissue anything themselves, I informed them, with my brokerage account rep on the phone, that he got the brokerage to move the money to the proper account with the next few days).

2) I have proof of movement into the appropriate regular IRA on my brokerage statement.

My question is, how do I enter this info in Turbo Tax?

401K

macuser_22

Alumni - Champ

Just to clarify: did you receive a single 1099-R that was split between a rollover of 401(k) funds to a Traditional IRA and 401(k) Roth to a Roth IRA?

Where did the money actually go?

A Roth 401(k) (designated Roth) can ONLY be rolled into a Roth IRA.

Is there an amount in box 5 on the 1099-R and is box 2a the same as box 1 minus the box 5 amount?

**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.**

KMan99Author

Level 2

Q: did you receive a single 1099-R that was split between a rollover of 401(k) funds to a Traditional IRA and 401(k) Roth to a Roth IRA?

A: I received two separate 1099-R statements, one 1099R for the Roth 401k transfer to the Roth IRA, and one 1099R for the Regular 401k that was transferred erroneously to the Roth IRA.

Q: Where did the money actually go?

A: The Roth 401k went correctly to the Roth IRA account. My question is regarding the fact that my Regular 401k erroneously was deposited initially to the Roth IRA account, and therefore the 1099R for that transfer appear with a taxable amount for the total deposit.

In addition, AFTER it was deposited into the Roth account, and after having spoken to the 401k transfer agent AND my IRA brokerage account rep, the IRA brokerage account rep saw to it that the money was correctly deposited into the Regular IRA.

Q: A Roth 401(k) (designated Roth) can ONLY be rolled into a Roth IRA.

A: I thought so too, but either they changed that, or the agent doing the transfer screwed up. Their process was screwy to begin with, I actually think they have a flaw in their system and I told them that, but they claim I made the mistake in transferring my traditional 401k to my Roth IRA account. I'm not here to point fingers, I just don't want to get taxed for a big transfer all at once from a traditional 401k to a Roth IRA account that should never have occurred.

Q: Is there an amount in box 5 on the 1099-R and is box 2a the same as box 1 minus the box 5 amount?

A: Box 5 is empty, box 2a has the same value as box 1

Let me summarize my problem in fewer words, just because I think my first question was a bit verbose:

1) Wanted to transfer my Roth 401k to my Roth IRA, that worked perfectly.

2) Wanted to transfer my Traditional 401k to my Traditional IRA, but that too was transferred to my Roth IRA.

3) As the result of the erroneous transfer from Traditional 401k to Roth IRA, the 1099R for that transfer is designated at taxable on my 1099, by virtue of showing a taxable amount equal to the transferred amount (Box 1 total = Box 2a total)

4) The erroneous transfer was resolved within days by speaking to my IRA brokerage account rep, who saw to it that the erroneously transferred amount was taken out of the Roth IRA and deposited into the traditional IRA.

I just need a way to get the IRS to recognize that the transfers were ultimately done the way they were originally intended, i.e.

Traditional 401k ---> Traditional IRA, and

Roth 401k ---> Roth IRA (this one, as I've mentioned was not a problem)

macuser_22

Alumni - Champ

Q: A Roth 401(k) (designated Roth) can ONLY be rolled into a Roth IRA.

How was it put into the Roth IRA? Was it an electronic transfer or did you received a check made out to your IRA any you deposited it without telling the IRA custodian which type of IRA it was to go to?

While 401(k) custodians are supposed to make checks payable to xxx's Traditional IRA or xxx's Roth IRA many do not and leave it up to you to tell the IRA custodian what type of IRA the money is to go to.

**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.**