Bug in 1099-R processing

warddrennan · ‎April 15, 2026

I completed rollovers from an employer's retirement account to a Roth IRA and to a traditional IRA. The 1099-R listed a "taxable amount" in box 2a (the Roth rollover) and a gross distribution in my case of about 10x that amount, a traditional IRA rollover). The taxable amount was rolled into a Roth, thus 90% is not taxable.

Turbo Tax, the online version, did not transfer the taxable amount to the 1040 as taxable income on line 5b. Turbo tax asks if the distribution is a rollover to a Roth account, and if I check yes, it transfers the FULL DISTRIBUTION on 5b as "taxable", not the actual taxable amount listed. This is clearly a bug. It's been around for years, and it hasn't been fixed.

I tricked the system by creating an additional 1099-R for the Roth rollover, and modified the original 1099-R for just the non-taxable amount. So, then I'd say the fully taxable 1099-R is a Roth rollover, and the non-taxable part is at traditional IRA rollover (not taxable). This made the 1040 correct.

Seriously, Intuit, I shouldn't have to do this. It's not that hard-- the "taxable amount" in box 2a should be listed as "taxable" on line 5b on the 1040!

dmertz

"the "taxable amount" in box 2a should be listed as "taxable" on line 5b on the 1040!"

If your 401(k) had basis in after-tax contributions and direct rollovers paid to the traditional and Roth IRAs were scheduled to be made at the same time, the taxpayer is permitted to select how the pre-tax portion is allocated between the traditional and Roth accounts. TurboTax cannot automatically split the rollovers without the additional information from the taxpayer indicating how to split the gross amount and the taxable amount between the rollovers. TurboTax obtains this additional information by requiring the user to enter each of the rollovers as a separate Form 1099-R. This is not a bug, it's a design choice intended to avoid an overly complicated user interface that would serve to confuse most users because most user's code-G Forms 1099-R report rollovers only to a single destination.

For a distribution reported with code G that was split between traditional and Roth accounts to be taxable to the extent shown in box 2a of the Form 1099-R, you could not have nay after-tax basis in the plan from which the distribution was made. If your Form 1099-R shows $0 in box 5, TurboTax could infer that the amount shown in box 2a went to a Roth IRA and and the rest when to a traditional IRA, but does not, and instead produces an incorrect amount on Form 1040 line 5b. However, given that TurboTax already requires splitting the From 1099-R into two when the distribution includes after tax basis, it's not unreasonable that TurboTax would require that any Form 1099-R that shows a split rollover be split into two for proper reporting. An alternative to splitting the Form 1099-R in this case would be to change the code to 2 or 7.