401k rollover to ira showing as Income impact IRMAA?

[Gussey]

I'm ready to file but TT is showing husband's 401k Direct Rollover to Rollover IRA as Income.  It's on Line 5 and shows ROLLOVER but now total MAGI income exceeds IRMAA Thresholds and he is on Medicare.  I'm tempted to check the IRA box even though it's not checked just so that it doesn't impact IRMAA.  Help?

Thanks in advance

[ReneV4 · Accepted solution]

A direct rollover from a 401(k) to a traditional IRA is not taxable and should not increase your MAGI, so it may be due to how TurboTax is presenting the information you have entered in a summarized format in that it may be showing the total distribution as income (Line 5a) without clearly indicating the exclusion on Line 5b. 

To determine if this transaction was reported properly, check your Form 1040 by following these steps:

1. Click Tax Tools on the left panel within TurboTax
2. Scroll down and click Tools
3. Select View Tax Summary from Tools Center once it opens
4. Click Preview my 1040 which will appear above Tax tools on the left panel
5. Scroll down and look for Line 5a, ensuring it contains the gross rollover amount 
6. Next, check Line 5b to ensure there is either a zero (0), or is blank

Note: If the software does not correctly show the above, you should not check the IRA box if it is not checked. Instead, try deleting the Form 1099-R entry and try again, using these steps:

1. Go to Income
2. Click Review on IRA, 401(k), and pension plan withdrawals
3. Click on the trash can to the right of your Form 1099-R, which will delete the Form
4. After deleting, go out of the Income section temporarily before inputting the Form again by clicking the Deductions & credits on the left panel
5. When re-entering, ensure Code G is used in Box 7 and that you answered "Yes" to, "Did you roll over this money to another retirement account?"

[Gussey]

Thank you, I did enter it correctly and 5b is -0-.  Spouse went on Medicare this year and the Summary Income showing this 401k rollover to IRA as Income and seeing it as a Pension caused me to panic for IRMAA.  For MAGI purposes the right column matters so the -0- in 5b is what is computed for MAGI.  Thank you for the detailed explanation and confirmation. 

[dmertz]

" 5b is -0-."

As you have learned, this rollover has no effect on Medicare IRMAA.  Only taxable income affects MAGI, and the rollover is nontaxable.  TurboTax's summary includes both taxable and nontaxable income.

[Gussey]

Thank you - it is jarring to see it especially when navigating MAGI for ACA and Medicare.