1099R - My rollover from 401k to traditional IRA says Ill be hit with penalties

[lgrimald1]

Hi - I added my 1099R to my turbo tax account, rolling over $5600 from a 401k to a traditional IRA but it's saying I contributed $400 more than Im allowed to in one year to a traditional IRA. Since it's a rollover it shouldnt count towards the yearly amount Im allowed to add to my IRA, right? Not sure why when I finished filing it said Ill be hit with a $26 fee every year.

[ChristinaS · Accepted solution]

It sounds like you are entering the rollover as an IRA contribution under Deductions and Credits. A rollover is not treated like a contribution, and is not entered within the contribution section. Please back out any dollar amounts you entered here that don't represent "new money". New money counts towards an IRA contribution, not money coming from a 401(k).

You account for your rollover within the income section. You enter the 1099-R, and indicate that it was rolled into an IRA.

You wouldn't receive excess contribution messages if you only entered a 1099-R. Please review the entries under Deductions and Credits- IRA contributions.

[mcraig]

Until I read this, I was so frustrated. I had the IRA rollover in two locations, wages/income AND in deductions/credits. Whew!