401K rollover to IRA but IRA/SEP/SIMPLE box isn't checked

[X3rx3s]

In 2024, I rolled my 401K to a traditional IRA (the 401K administrator did not do direct rollovers, so they mailed me a check, which I then deposited into a rollover IRA account with a different financial institution). I received a 1099R from the 401K administrator with distribution code G and the IRA/SEP/SIMPLE box unchecked, so I think TurboTax is treating it as a 401K withdrawal. How do I resolve this?

[DavidD66]

The IRA/SEP/SIMPLE box is not supposed to be checked because it was not a distribution from an IRA....  It is 401(k) withdrawal, that you rolled into an IRA.  After you enter(ed) the 1099-R, there is a page that asks "What Did You Do With The Money From [Retirement Plan]"? Be sure you indicate that you "rolled over all of this money to an IRA or other retirement account (or returned it to the same account)." 

Answering these questions correctly will result in your distribution showing up as non-taxable.

[jingtastic]

Thank you, the problem is that there was no "What Did You Do With The Money From [Retirement Plan]" page after I entered the details of my 1099R and therefore nowhere to enter that I'd rolled it into an IRA. The questions I got after entering the details of my form were: "Is the IRA/SEP/SIMPLE box on this 1099R checked?" (No), followed by "Did you move this money from a 401K to a Roth 401K?" (No), "Where is you distribution from?" (None of the above), "Do any of these situations apply to you?"  about being public safety officer or needing a substitute 1099R (None of these apply), "Did you move the money to a Roth IRA?" (No).

What am I missing?

[PB51]

I have the exact same experience with the webpages when I try to enter a direct rollover of a 401 plan to an IRA

[BillM223]

It seems that the 401(k) administrator did not realize that you were doing a rollover from your 401(k) to a traditional IRA, so the administrator should not have used distribution code G. 

If the box 7 code were 7, then you would have seen that "What did you do with the money" question that David referred to.

Call your administrator and ask why they used code G instead of 7. Maybe they misunderstood what you were doing, and maybe they will issue a corrected 1099-R.

[PB51]

They used G because mine was a direct rollover.  I did talk with my plan administrator and he said that something odd is having with TurboTax.

[BillM223]

PG51:

Was your transfer really a "direct rollover" in the sense that the IRS intends, that is, a trustee to trustee transfer?

In the original question, there was no a "direct rollover" because the amount was sent to the taxpayer as a check. 

Please read "How do I complete a rollover?" to see how the IRS handles the terminology.

So PG51, do you really have a "direct rollover" in the IRS sense, and is one of accounts a Roth? I am not convinced that your example and that of original poster are the same.

@PB51 

[dmertz]

A From 1099-R for a direct rollover from a traditional account in a 401(k) to a traditional IRA should have code G in box 7, the IRA/SE{/SIMPLE box unmarked and a zero in box 2a.  After entering such a Form 1099-R into TurboTax and answering No to both questions asking about rollovers to Roth accounts, TurboTax will automatically treat this as nontaxable income, included on Form 1040 line 5a but excluded from line 5b with the ROLLOVER notation.

[PB51]

Yes, it was a direct trustee-to-trustee total rollover from a 401(a) governmental supplementary pension plan to a Roth IRA at a commercial financial institution.

[PB51]

You are right that my case was not exactly the same as the earlier post, but our experiences with the TT webpages was identical.

[PB51]

That’s what I thought would happen, but the TT webpages kept marking this rollover as “needs more required information.”  They didn’t say what information they needed, and the page that covered answering “Did you move this money from a 401(k) to a Roth 401(k)” wouldn’t accept my answer of no.  I even tried yes and had the same response.

[Alex144]

I'm having a similar issue. In 2024 I did a direct rollover of an employer sponsored 401k to an IRA (Roth account for the Roth contributions and traditional account for pre-tax contributions) and TT is indicating an additional tax of $249 on "IRA distributions." On my review page I see the summary, "After applying your deductions, your taxable income was $$$$. Based on this, your total tax before any credits was $$$, which includes an additional tax of $249 on your IRA distributions." The crazy thing is, I deleted my 1099-R forms from my return and it's still trying to incorrectly tax me! The software seems to have an error.

[dmertz]

@Alex144 , what are the codes in box 7 of the Forms 1099-R that you have received?

Were any amounts withheld for taxes?

[PB51]

In sharing your experience, you have succinctly and exactly described my situation as well.  I have talked with my plan administrator 4 times, and he said everything in the 1099-R that they sent out is correct.  The G in box 7 was used because the plan did a trustee-to-trustee rollover.  The distribution did come to or through me.  I don't know how to contact TT in order to have them look at their program.  So glad that you shared your experience.

[PB51]

One addition for dmertz:  No taxes were withheld because this type rollover does not incur taxes.  Thank you for responding to this issue.