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ET6
Returning Member

401K In Service Distribution to both IRA and Roth

In 2019, I took an in service distribution from my 401K of ~50K.  $30K was pretax and rolled to an IRA.  $20K was after tax and rolled to a Roth IRA.  My 1099R has 50K in box 1, 20K in box 5 and type G in box 7.  When I enter the data for the 1099R and answer the questions, it indicates that I owe Federal taxes.   I was expecting to owe $0 taxes since I rolled over the money to IRA and Roth funds.   I'm guessing I'm answering the questions incorrectly?

 

a) Is this 1099 reporting a rollover of funds from a 401k to a designated Roth 401k?

I answer No since I rolled to a Roth fund that wasn't a 401k Roth fund.

 

b) For rollovers to a Roth IRA, addition info is needed.  For rollovers to all other types of accounts answer no.

I answer Yes since 20K went to an Roth IRA.(Note if I answer No I owe $0)

 

c) Did you make any after-tax contributions to 401K?  This would be contributions by you made yourself, rather than by your company on your behalf (this is rare)?

This is confusing.   In 2019, I did may After Tax but via the Company not directly.   Since this is rare,  I assume having my company take money out of my paycheck and placing it in 401K for me must be an answer of No.

 

I look at the forms and B5 has the X that the entire B4 value of 50K has been given to Roth IRA.   That is not correct but I don't see any question that asks me how much went to IRA vs Roth.    Doesn't the 1099 R indicate that with the Box 1 and Box 5 values?

 

Am I answering the questions right?   Or has the tax law changed?   Or does Turbo Tax have a bug?

2 Replies
macuser_22
Level 15

401K In Service Distribution to both IRA and Roth

No, not a bug.   Just that TurboTax cannot split a 1099-R to two different distinctions.

 

 

TurboTax does not directly support a single 1099-R going to two different destinations.

What you must do is split the 1099-R into two 1099-Rs.

For the amount rolled to the Traditional IRA.

1) In box 1 use the original 1099-R box 1 minus the box 5 amount.

2) Box 2a = 0.

3) Box 5 = blank.

4) Box 7 = G.

5) Answer NO to the two interview questions that ask about a Roth - the default is a Traditional IRA.

For the amount rolled to the Roth IRA.

1) In box 1 enter the original box 5 amount.

2) Box 2a - 0.

3) Box 5 = original box 5 amount.

4) Box 7 = G.

5) Answer NO to the first interview question about a 401(k) Roth and YES to the rollover to a Roth IRA.

That should properly report the 1099-R. The box totals of the two 1099-R should equal the amounts on the original 1099-R.

Nothing about splitting into two 1099-R's go on a tax return - the IRS only gets the dollar amounts on the 1040 form.

**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.**
ET6
Returning Member

401K In Service Distribution to both IRA and Roth

Thank you.  It worked

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