employer 401k to roll over to solo 401k

[futurestrader39]

I had to close out my employer 401k due to a few factors, I was under the assumption I could hold it with them for as long as I wanted. I was wrong and had to roll it over into a roll over IRA or risk the consequences. This was a shock and I rolled it over immediately after that I then immediately moved all that money into my solo 401k.

Do I need to do/file anything with the roll over? There is no money in that account now 

Thank you,

[dmertz]

Each of these rollovers is reportable on a separate Form 1099-R, one from the former employer for the rollover to the IRA and another from the IRA custodian reporting the rollover from the IRA to the solo 401(k).  Each of these is reportable on the tax return for the year of the Form 1099-R, the year in which each distribution occurred.

Because a solo 401(k) does not report to the IRS receipt of rollovers, you should include an explanation statement with the tax return that reports this rollover to avoid the IRS questioning whether or not the rollover was actually completed.

[futurestrader39]

Are you saying to fill out the 1099-r and then send in a note saying this is what happened or send in an explanation of what happened? Also where would I add this information in?

Thanks for the quick response

[dmertz]

Enter the Forms 1099-R that you received and answer the follow-up questions regarding what you did with each of these distributions.  Since TurboTax does not prompt you to enter an explanation statement, you would generally create the explanation statement outside of TurboTax and include it with your printed and mailed tax return.  You could omit the explanation statement and e-file, but be prepared to respond with the explanation if the IRS questions the rollover from the IRA to the solo 401(k).

[futurestrader39]

thanks for the information!

Last question inst it going to automatically make me pay taxes on this roll over?

Thanks again for the quick response.

[dmertz]

TurboTax knows to report this sort of rollover as nontaxable income provided you answer the follow-up questions correctly.

Also, If you are using the CD/download version of TurboTax, TurboTax might include in your e-filing an explanation added in forms mode by clicking the Explain button on line 4b of the 1040/1040SR Worksheet, but, in case that doesn't work, still be prepared to provide a separate explanation if the IRS asks for one.