How can I enter a non-taxable rollover on Turbotax?

[macuser_22]

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@TurboLover2 wrote:

Okay I found a way to make the 1040 come out correct.

The 1099-R reports box 7 as Code 4 (Death).

I changed the code to code G "Direct Rollover and rollover contribution"

This caused line 4a on the 1040 to include the full amount of the partial RMD distributed and line 4b to be zero with the word "ROLLOVER" noted.

I am not sure if code G is the proper code they should have used on the 1099-R and they made a mistake, but I do know that the 1040 is now properly completed and that's what counts.

I suspect that the code 4 was a mistake because the person who died died in 2019, not 2020, and I suspect that code is only for the year of death.

Anyway, wanted to share my solution in case it can help someone.

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A code 4 is proper for as long as you receive distributions from the inherited IRA. 

  A code G implies  that this was a retirement plan of YOURS, that was transferred by the plan custodian, without you ever seeing the money, to another plan.  That code can NEVER apply to an inherited IRA. 

Delete it and enter as I said above and say that it was NOT inherited to get the rollover question.

[TurboLover2]

Thanks macuser_22.  I've already done that thanks.  But either way it doesn't matter because the code "G" I put in to bypass the TT bug doesn't affect anything else on my returns and isn't reported to the IRS.  So in my case either solution works.

[macuser_22]

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@TurboLover2 wrote:

I would call this a TT bug since answering that it is an inherited IRA (which it is) yields a dead end.  TT currently has no support for rollovers of inherited IRAs under the CARES Act.

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Perhaps.  But except for 2020 and the CARES act, inherited rollovers are not allowed. 

Because the major filing season will end in about a month, I very much doubt that they will make any changes since there is an easy workaround.

[TurboLover2]

Either way macuser_22, thanks for your help!

Unfortunately, those with similar distributions who used TT this season and are not tax savvy enough to know there is a mistake on their forms may have paid taxes they did not owe.  That's unfortunate.

[73mb]

Thank you.  Good information.  I returned the entire amount in December.  Hope your answer will work for me.

Always grateful for the support. 

[rhugg3]

3/26/20 Updates falsely report IRA Rollover as taxable income.

[macuser_22]

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@rhugg3 wrote:

3/26/20 Updates falsely report IRA Rollover as taxable income.

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Where do you see it as taxable?

What is on the 1040 line 4b?

[rhugg3]

line 4b shows the full amount as taxable instead of 0.  Yesterday it worked fine, I filed and was accepted.  Today, I did the updates. I changed nothing in the return.  When opened, I saw my refund had decreased and found the "new error"  1099-R has correct "rollover" box checked, just not linking to the 1040 correctly.

[macuser_22]

That is odd, but If it was accepted then I would not change anything.

You can duplicate the .tax2020 data file and play with the copy.   Using the copy delete the 1099-R and re-enter it.   It is possible that you answered a question inporperly before and the update caught that.

Be sure that you say that it was not COVID related if it was a rollover.

[rhugg3]

Did all that.  Rolled back the updates, worked fine.  Reinstalled 2 x's, once with the manual update, once with it updating itself.  Both times, once updated with the 3-26-20 updates, the "error" occurred.

[macuser_22]

Works fine for me.  What code is in box 7 on your 1099-R?

Is the IRA/SEP/SIMPLE box checked?

[rhugg3]

Box 7, 1st code is 4.  No other codes.  Simple box checked.

Anyway, I figured a way to get it to work.

If you use the Step by Step, you must answer NO to "did you inherit this IRA from....."  Answer all the other questions accurately

OR

on the 1099-R leave the section under Inherited IRA blank,

OR

on the 1099-R under inherited IRA, check "Treat as recipient's own (this is treated as a rollover"

Not sure which workaround is better.

Something obviously changed with the updates because all worked before with "Someone other than spouse" checked and the same amount in gross distribution and 2a, taxable amount.

BUG!

[scrastogi8]

I tried to follow instructions by KatherineC

I reached to the place where "Click on the button beside IRA, 401(k), Pension Plan Withdrawals (1099-R) (See the screenshot below)"

At this step I did not get to what KatherineC  directed to. I did not find anything as she stated.

Please help.

Subhash Rastogi

[email address removed]

[fanfare]

@scrastogi8 

You really should start your own question instead of this very old thread.