401K roll over distorts income

Forum|Forum|6 years ago
February 15, 2020
2 replies
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Rolled over my traditional 401k to my new employer's plan. Followed all directions, all's well; I can see that I am not be taxed on the distribution.

However, my return now shows a grossly distorted income due to the roll over showing as income. This may be of no technical consequence.... but it sort of bothers me.

When entering the roll over distribution info and amounts I was expecting an opportunity to show off-setting entries; that is, xxx-amount distribution from the previous IRA and the same xxx-amount shown as being rolled-over into the new IRA, with one entry washing out the other, so to speak

Did I miss a step?

Thanks

RTLL

MaryK4

Level 15

Yes, TurboTax includes the rollover as income even if it is not taxable- it is just the TurboTax treatment. I think it so you can make sure all income is entered, but I tend to agree it can be confusing and unnecessary- it does not affect any tax.

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RTLL1958Author

Level 2

Thanks for the help!

RTLL

dmertz

Level 15

No, you did not miss a step. This is indeed considered under the tax code to be income even though it is nontaxable. It is required to appear on Form 1040 line 4c but has no other effect on your tax return or anything else because it is excluded from line 4d.