1099R - 401k Rollover error

[KMan99]

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?

[macuser_22]

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?

[KMan99]

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]

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.

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.

[KMan99]

I never received a check, a check was sent directly to the IRA brokerage account, but the account number specified on the check was the Roth IRA account.

I entered the info online, but it was very convoluted, and the custodian had very strange rules. They said that Roth transfers had to be entered first, which is what I did, I entered the info to transfer my Roth 401k to my Roth IRA.

Once I finished that, I entered my traditional IRA account number to transfer the traditional 401k account. However, as I mentioned, I think they have a bug in their system, first, because they probably don't have a lot of account transfers, second, because they didn't offer the Roth 401k until much later, those who did close out their 401ks to move them to IRAs probably just had one type or the other, not both, like I had.

I truly believe they did not test their system adequately to check how a transfer of both types of accounts could be transferred in a single session.

But, to go back to your question, No, I didn't receive a check, the 401k custodian wrote and sent the paper check for the traditional transfer to the Roth IRA account.

[macuser_22]

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@KMan99 wrote:

I never received a check, a check was sent directly to the IRA brokerage account, but the account number specified on the check was the Roth IRA account.

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So the brokerage deposed the money into the wrong account and not the one specified on the check?   Talk to the broker for a correction of their error.

[KMan99]

@ChampChiran

No, the brokerage deposited into the account that was specified on the check, but as I mentioned, the check should have been made out to the traditional IRA account.

The custodian claimed that I erroneously designated that the traditional 401k check was to be deposited into my Roth IRA account, so they steadfastly refused to correct an error they claim they didn't make. The check said the traditional 401k  should be deposited into the Roth IRA (from the start, that's not what I wanted), and that's what the brokerage did.

I DID get the brokerage to rightfully transfer the deposited money into my traditional IRA days later, but the brokerage holding my IRA isn't the one who sends a 1099R to the IRS, that's done by the custodian of the 401k who sent the check, but now the 1099R says I had a taxable distribution as a result of that transfer  (traditional converted to Roth), but everything was fixed up on the front end, the brokerage deposited the money into my traditional IRA, it's just that the tax form, the 1099R, says something different, that I converted a traditional 401k to a Roth IRA, and that's what I'd like to find out, how do I report this in TurboTax?

In other words, as far as the money part of it goes, everything is correct, my traditional IRA received the money after it was erroneously deposited in my Roth IRA from my traditional 401k, it's just that the 1099R paperwork doesn't say that, so how do I report this in Turbotax?

I did see something in Turbotax that lets me input an "amended" 1099R amount, that can be done despite the fact that the custodian may not produce an amended 1099R to fit the facts, and I do have a letter from the 401k custodian stating that the amount was ultimately deposited into my traditional IRA, and furthermore, I do have the transaction history from my traditional IRA and Roth IRA brokerage accounts showing that the money deposited into the Roth  IRA was transferred to the traditional IRA just a couple of days later, but how do I provide this evidence from within Turbo tax? One person told me that maybe I have to file a paper return instead of an electronic return, including copies of the letter and my brokerage transfers. Is that the only way?

I'll have to defer further answers to any further questions until tomorrow, it's getting late here on the east coast. Thanks for your replies so far.