Can Fidelity issue a Corrected 1099-R due to the incorrect 1099-R they sent to the IRS? Our AGI will go up & SS down. What to do? Fidelity does not answer their phones?

[Trabia78]

I really appreciate all of your responses.  According to page 2 of the 1099-R, the Code G states "Direct rollover of a distribution to.......an IRA.   The IRS gives us 60 days within which to rollover to an IRA.  We rolled over the 401K money to an IRA within seven (7) days.  Also, Fidelity never properly advised us regarding the 3-27-2020 ruling that due to the pandemic, we are not required to take a distribution.  We just took the money out and within 7 days, we rolled it over.  We learned about the 3-27-2020 pandemic ruling last week when I started to prepare taxes via TurboTax.  The problem is that our AGI will go up and our social security checks will go down.  We live in $64,000 per year before taxes.  I do not undertand these reponses.

[macuser_22]

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@fanfare wrote:

If you use Code 7 but enter the Word "Rollover" on Form 1040,

that also will disagree with the Form 1099-R sent to the IRS by Fidelity.

Yet the IRS takes your word for it.

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A code 7 rollover does not disagree with the 1099-R at all since a code 7 1099-R is permitted to be rolled over and the word rollover next to the 1040 line 4 or line 5 is required by the IRS.   That is not disagreeing it is complying.

If there is box 4 withholding the 1099-R cannot be code G and the TurboTax form is sent to the IRS that will disagree with the form received from the financial institution guaranteeing a IRS audit letter.

[Trabia78]

Code G in Page 2 of the 1099-R document does not represent tax withholding.  It represents the rollover from a 401K to an IRA within the 60-day limit presribed by the IRS.  Donna

[macuser_22]

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@Trabia78 wrote:

I really appreciate all of your responses.  According to page 2 of the 1099-R, the Code G states "Direct rollover of a distribution to.......an IRA.   The IRS gives us 60 days within which to rollover to an IRA.  We rolled over the 401K money to an IRA within seven (7) days.  Also, Fidelity never properly advised us regarding the 3-27-2020 ruling that due to the pandemic, we are not required to take a distribution.  We just took the money out and within 7 days, we rolled it over.  We learned about the 3-27-2020 pandemic ruling last week when I started to prepare taxes via TurboTax.  The problem is that our AGI will go up and our social security checks will go down.  We live in $64,000 per year before taxes.  I do not undertand these reponses.

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Yours was NOT a direct rollover so code G is not proper and there can be not be 4 tax withholding with a code G.   

In indirect rollover and a Code G will do the same thing if the money was rolled back.     Neither one is taxable.   However, a code 7 with box 4 withholding (that was also part of the distribution) means the the box 4 withholding IS a taxable distribution  and must be accounted for.     You cannot say that the entire box 1 amount was rolled over if part of box 1 was withheld in box 4, unless the box 4 tax was made up for with other funds at the time of the rollover - TurboTax will ask about that.

[fanfare]

@Trabia78 regardless of the nuances, if you had withholding taken out that cannot be undone.

So please use the document you got as is.

[fanfare]

As long as your AGI is below $200,000 after rollover your medicare won't go up.

But, if it does, it will go back down the next year.

[Trabia78]

I am so sorry.  I don't think that you undestand what I am saying.  I am specifically talking about Box 7 titled "Distribution Codes IRA/SEP Box.  Box 7 should be Code G and the IRA box should be checked.  We took money out of our 401K and we rolled over that money within 7 days to the IRA.  The IRS says we have 60 days to rollover the money to an IRA.  We rolled it over in 7 days.

[Trabia78]

Thank you.  If we do not use Code G and check off the IRA box in the 1099-R, which did in fact occur, our AGI will be $212,000 and our SS checks will go down.  We live only on $64,000 per year before deductions.

[Trabia78]

We really appreciate all of your help.  What does it mean that the IRS gives us 60 days within which to rollover money from a 401K to an IRA in order to get a Code G in Item 7 of the 1099-R?

[fanfare]

@Trabia78 

is that after you told TurboTax how much money you put back into the IRA ??

You must press CONTINUE after entering the 1099-R document.

[macuser_22]

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@Trabia78 wrote:

We really appreciate all of your help.  What does it mean that the IRS gives us 60 days within which to rollover money from a 401K to an IRA in order to get a Code G in Item 7 of the 1099-R?

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The IRS give you 60 days  do an indirect rollover for the code 7 1099-R to  avoid tax on the  money.   That does NOT make it a code G it remains a code 7 as a rollover.

Again a code G is for a DIRECT ROLLOVER which means that YOU never received the money.  The financial institution that holds the account itself made the transfer to the other account and YOU never saw the money at all.      The 60 day rule does not apply to direct rollovers.

[VolvoGirl]

The 1099R will have Code G if the 401K plan did a Direct Transfer to the IRA.  You are not understanding the prior posts.  Your 1099R code 7 is right.  Now another problem is....when you put it in the IRA did you also put back in the 20%  that was withheld for taxes?  If you did not replace the 20% from your own money then the 20% became a distribution itself and taxable income.

After you enter the 1099R say NO it was NOT a RMD (since RMDs were not required)  Then it will ask what you did with the money.  Say you rolled it over.  Then it will show on on 1040 line 5a gross amount and the word ROLLOVER by line 5b Taxable amount.  Line 5b will be zero or the 20% if you didn't put it back.  

[Trabia78]

Yes, I entered the amount of the 401K withdrawal and also the amount of the IRA.  If I enter Code G and click the IRA box in the Form 1099-G, then our AGI is down to our gross social security wages.  But if I enter the number 7 and do not click on the IRA box, then our AGI goes way up and our SS check will go down.  Yes, I clicked Continue.

[Trabia78]

We NEVER received the money.  Within 7 days after our 401K withdrawal, we instructed Fidelity to set up the IRA.  Since we never received the money, it must have been a direct rollover.  This is quite ridiculous.  

[Trabia78]

Many thanks for your help.  Within 7 days, we rolled over the 401K withdrawal to an IRA.  Fidelity took out the 20% for taxes and paid the Federal taxes.  We NEVER saw ANY money.  It was always at Fidelity.  Take care.  Donna