1099R

[Little Steve]

A family member withdrew all their funds from their 401k due to a job loss and financial difficulties. This person rolled their 401k into a traditional IRA within 60 days of 2020 less some cash to cover expenses. She now has a 1099R from the 401k and a 1099R for the money she didn't put into the IRA? It seems like she is being taxed twice? Is this correct?

[JohnB5677]

Did she get one or two 1099-R's. 

If she got only one you're all set:

• If its for the full amount (this is most likely) you will go through the interview and respond YES she did roll it over into another IRA account. You can then indicate that it was a partial rollover.
• If its only for the smaller amount.  It will be posted and you will indicate that it was used for something else.

If you got two 1099-R's that were both for the same money you will have to get in touch with your HR department, or the 401(k) administrator.

[Little Steve]

She received 2. I was just told that she was instructed to put all 401k funds into the IRA and then withdraw what she needed when the 401k funds were received. Was this correct advice? Is she being taxed twice on the same money? I appreciate your help.

Thank you

[CatinaT1 · Accepted solution]

I suspect one 1099-R is for the amount she rolled over into the IRA and one is for the amount she actually withdrew.  What are the distribution codes in Box 7?  If there is a code G on one, that signifies it was a rollover and is reportable, but will not be taxed.

[SLYKTAX]

Hi,

I retired from a local government in Dec 2020.  I had my 457 retirement money all rollover to Charles Schwab from VOYA who was the custody of my 457 account.  Today, I received my 1099-R from Voya and Box 1 Gross Distribution with all the amount that was rolled. And   Box 5 Employee contribution/..... which is about $131,000 less than Box 1.   I don't see anywhere saying that the money was rolled instead.  The form looks like I cash out all the money and I would have to pay lots of taxes for them.   Does anyone agreed to the form that I was issued?  Do I expect another tax form from Charles Schwab saying that the distribution was rolled not cashed out? Thanks

[DianeW777]

The form you received should be reported on your tax return and it should be a tax free rollover.  The code in Box 7 is the key, as well as answering the questions correctly about the rollover. You should see 'Code G' in that box and you need to use that code on your tax return when you complete the Form 1099-R.  

• What do all the codes in Box 7 mean on my 1099-R?

Unless you have taken any distribution in 2021, from the Charles Schwab account, then you should not receive a Form 1099-R from them.

It sounds like you did a direct transfer from one account to the other without it coming into your hands.  This action will report the income but will also show as nontaxable.

1. Type 1099-r in the search box and click search.
2. Click on Jump to 1099-r.
3. At the choose your bank or brokerage screen, click on I'll type it in myself.
4. Enter your 1099-R form exactly as shown. If the form has Box 7 with code G, Rollover, TurboTax will automatically enter it as a Rollover on your income tax form.
5. If your form does not have Box 7 with code G, Rollover, on the What Did You Do With The Money From This Payer? 
6. Continue to answer the questions.  See the images below for assistance when code G is present.
7. The final image can be seen when you 'Preview My 1040' 

[SLYKTAX]

Thank you very much DianeW777.  You stopped my panic of getting tax for nothing.  I contact Schwab earlier and they said I only expect to receive Form 5498 about that distribution in mid May , which is after the Tax filing and that just add more panic to my state of mind.  Indeed, the code in Box 7 is G. I can sleep well tonight.  Thanks again!