1099R Summary Calculations

[frenzel]

I have a 1099R with 200,000 in box 1, and 50,000 in box 2a (obviously fake numbers).  In the 1099R Summary form, lines 25 and 25a seem correct.  They show 200,000 and 150,000 respectively.  I rolled over 150,000 of the 200,000, and the remaining 50,000 is taxable.  However, lines 26a and 26b seem incorrect to me.  26a shows 50,000, but 26b is 100,000.  It seems to have subtracted the 50,000 taxable amount from the amount rolled over.  32a and 32d both show $0, which also doesn't seem correct.  Is it possible that lines 26a and 26b are not calculated correctly?

[dmertz]

"I rolled over 150,000 of the 200,000, and the remaining 50,000 is taxable."

That's incorrect.  A rollover consists first of the taxable portion of the distribution.  (26 U.S. Code § 402(c)(2))  That means that the rollover consisted of the $50,000 taxable portion plus $50,000 of the nontaxable portion, making the entire distribution nontaxable.

[frenzel]

Thanks for the quick reply, but I still don't understand what you're saying.  Perhaps I'm confusing two numbers that just coincidentally are the same.  1) On my 1099R, I have 200,000 in box 1, and 50,000 is box 2a.  I would assume that means I need to pay taxes on that 50,000.  2) If that's true, then something about the way I'm entering the 1099R and answering the related questions is wrong.  When it asks if I rolled over the entire amount, I answer "no", then I tell it how much of that 200,000 I rolled over, which is 150,000.  With those answers, I get $0 income tax owed, when I think I should owe tax on that amount from box 2a.  I read the tax code reference you sent, and it seems to say if I rolled over 150,000 of 200,000, I still owe tax on the 50,000 that I didn't roll over.  

[MelindaS1]

If this is a rollover from a 401k to a traditional IRA with a partial taxable distribution, see if code G is listed in box 7. If so, you will enter that code and the software will calculate this automatically. 

I believe you're looking at a worksheet called "1099R Summary." Can you instead share the amounts that are showing on Lines 5a and 5b (or 4a/4b if an IRA) on Form 1040? Thank you.

[dmertz]

MelindaS1:  Unless the Form 1099-R was prepared improperly or the rollover was mishandled, a Form 1099-R that reports a distribution only part of which was rolled over cannot have code G in box 7 because code G means that the entire gross amount was rolled over.  That combined with the details provided from the 1099-R Summary indicate that the distribution is therefore from a traditional account in an employer plan and that the rollover was an indirect rollover, so the Form 1099-R must have code 1, 2 or 7 in box 7.

frenzel:  The distribution consisted of $50,000 of pre-tax funds and $150,000 of after-tax funds.  (Presumably at least $5,000 of this distribution went to mandatory tax withholding.)  By operation of law, a rollover of $150,000 of that distribution consists of all $50,000 of the pre-tax funds and $100,000 of the after-tax funds, leaving $50,000 of after-tax funds not rolled over.  That's what the 1099-R Summary is telling you.  Because the entire $50,000 of the pre-tax funds was rolled over, the taxable amount of the distribution is $0.

Perhaps you desired that the portion rolled over consisted of the entire $150,000 of after-tax funds, leaving the $50,000 of pre-tax funds not rolled over and therefore taxable, but the tax code does not allow you to designate which portions are the ones rolled over.  As I mentioned, the tax code dictates that the first portion of the rollover comes from the otherwise taxable portion of the distribution, so in this case that portion becomes nontaxable due to having been rolled over.