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?
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.