Class Action Settlement 401K

[VB58]

I received funds in April 2020 from a Class Action Settlement pertaining to funds residing in a prior 401k plan that I rolled over several years ago into another qualifying plan. The funds I received in April were sent directly to my current 401K plan. The funds were distributed by the Class Action Administrator not by my old employer plan administrator. I didn't receive a 1099-R form. How do I handle this on my taxes or is this even reportable since it went directly into my current 401K plan?

[ThomasM125]

Most likely, this is considered a rollover and as such it is not taxable. If you receive a 1099-R form for it, there will be codes on it which will determine how and it is taxed. Otherwise, you do not need to enter it on your tax return.

[VB58]

Thanks for your response. I will not be receiving a 1099-R for this settlement that was sent directly into a qualified 401(k) plan. 

Turbo Tax keeps asking me about a substitute 1099-R. Is this required as the funds were distributed by the litigation admininistration and not from my old plan administrator?  I rolled over all of those funds into my current plan several years ago.

Thanks

[MaryM428]

The income from the Class Action Settlement is reportable.  Since you will not receive a 1099-R, you can create a substitute 1099-R in TurboTax to report the income received and rolled into your current 401K plan.  

The IRS allows you to use federal Form 4852 to show proof of income you received through retirement distributions, annuities, insurance and IRAs.

Form 4852, Substitute 1099-R

[VB58]

Thank you Mary,

I have a couple of questions, When I go to fill out the 1099-R Turbo Tax keeps asking me for the Payer's Federal Tax Number. I do not know this information and according to the help information it can be left blank if you don't know it. Because this is a Substitute 1099-R is it required?

My other question is do I have to notify the IRS that I didn't receive the 1099-R? Everything I am seeing it says that the IRS will provide me with a Form 4852. I have this form in the Turbo Tax software already. This is a little confusing to me.

Thanks. 

[DaveF1006 · Accepted solution]

According to the 4852 instructions from the IRS, you need to contact the IRS first. "If you don’t receive the missing or corrected form from your employer or payer by the end of February, you may call the IRS at 800-829-1040 for assistance. You must provide your name, address (including ZIP code), phone number, social security number, and dates of employment. You must also provide your employer’s or payer’s name, address (including ZIP code), and phone number. The IRS will contact your employer or payer and request the missing form. The IRS will also send you a Form 4852. If you don’t receive the missing form in sufficient time to file your income tax return timely, you may use the Form 4852 that the IRS sent you to file with your return.

I would contact the IRS first instead of filing out the information on your own.