Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
selenaz
Level 2

401k rollover to traditional IRA then withdrawal from traditional IRA

I rolled over $9000 from 401k to a traditional IRA account (both different companies) then I withdrew that $9000 to help pay for mortgage down payment as a first time homebuyer.  I got two 1099Rs from the different retirement companies.  I entered both into the retirement forms and they are counted double as $18,000 withdrawal, one taxable (IRA withdrawal) and the other non-taxable (rollover).  Shouldn't it only count once in the total of $9000.  How can Turbotax calculate this as one amount, what do I need to do differently?  Please advise. Thanks.

2 Best answer

Accepted Solutions
DawnC
Expert Alumni

401k rollover to traditional IRA then withdrawal from traditional IRA

It sounds like it is correct.  The rollover is not taxable.  The IRA withdrawal is taxable.  If this was a first time home purchase, then the penalty is waived.  You still have to pay the ordinary income tax on the disbursement, but the 10% penalty is waived.   When you look at your Form 1040, you should see $18K is retirement income, but only $9K on the taxable line, which sounds like what you described above.  There should be no penalty for either transaction.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

BillM223
Expert Alumni

401k rollover to traditional IRA then withdrawal from traditional IRA

Line 4a on the 1040 should show $9,000 and so should line 4b (note: other amounts may be included if you had other IRA distributions, so the $9,000 is the minimum). ALSO NOTE: because of the weird IRS instructions, the amount in 4a may be zero or blank. As long as the $9,000 shows up in 4b, this is correct.

 

Line 4c should show the $9,000 401(k) distribution. Line 4d show not show the $9,000 because a rollover is not taxable (again, if you had other pension or annuity distributions, they will be added to these two lines).

 

Only the IRA's $9,000 should appear in line 8b, your Adjusted Gross Income.

 

If 4d includes the $9,000, then you need to return to the 1099-R interview and make sure that you indicated that this event was a rollover.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

4 Replies
DawnC
Expert Alumni

401k rollover to traditional IRA then withdrawal from traditional IRA

It sounds like it is correct.  The rollover is not taxable.  The IRA withdrawal is taxable.  If this was a first time home purchase, then the penalty is waived.  You still have to pay the ordinary income tax on the disbursement, but the 10% penalty is waived.   When you look at your Form 1040, you should see $18K is retirement income, but only $9K on the taxable line, which sounds like what you described above.  There should be no penalty for either transaction.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

selenaz
Level 2

401k rollover to traditional IRA then withdrawal from traditional IRA

I'm just confused on why it is counted as added income ($18,000) to my total income when the real amount is only $9000?

 

I'm assuming line 8b on the 1040 excludes the rollover as income?

BillM223
Expert Alumni

401k rollover to traditional IRA then withdrawal from traditional IRA

Line 4a on the 1040 should show $9,000 and so should line 4b (note: other amounts may be included if you had other IRA distributions, so the $9,000 is the minimum). ALSO NOTE: because of the weird IRS instructions, the amount in 4a may be zero or blank. As long as the $9,000 shows up in 4b, this is correct.

 

Line 4c should show the $9,000 401(k) distribution. Line 4d show not show the $9,000 because a rollover is not taxable (again, if you had other pension or annuity distributions, they will be added to these two lines).

 

Only the IRA's $9,000 should appear in line 8b, your Adjusted Gross Income.

 

If 4d includes the $9,000, then you need to return to the 1099-R interview and make sure that you indicated that this event was a rollover.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

selenaz
Level 2

401k rollover to traditional IRA then withdrawal from traditional IRA

thank you so much for the clarification

Dynamic AdsDynamic Ads
Privacy Settings
v