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ernestwilliamsiv
New Member

I have a taken an early distribution from a normal 401k and from Roth 401k. How can I indicate that the Roth portion is not taxable?

 
3 Replies
dmertz
Level 15

I have a taken an early distribution from a normal 401k and from Roth 401k. How can I indicate that the Roth portion is not taxable?

Unless your Roth 401(k) investments have lost value, some portion of your Roth 401(k) distribution is taxable.  Your code 1B Form 1099-R will have in box 2a the taxable amount of the Roth 401(k) distribution and will have in box 5 the portion that is nontaxable.

gloriah5200
Expert Alumni

I have a taken an early distribution from a normal 401k and from Roth 401k. How can I indicate that the Roth portion is not taxable?

Yes, the 1099R for the Roth distribution should contain codes in the boxes 5, 7 (could be multiple entries), etc., along with the checkboxes below box 7 and box 2b checkbox entries to be sure the correct taxable amount is determined and entered.  You may also have entries in box 11.

 

The taxable portion of the distribution may be reported in box 2a.

 

When your distributions from your Roth show that you have taken all your original contributions (basis) to the plan out, then the remaining distributions will be taxable to you.

 

Refer to the following link in IRS Publication 590-B for additional information:

 

Are Roth Distributions Taxable

 

 

 

dmertz
Level 15

I have a taken an early distribution from a normal 401k and from Roth 401k. How can I indicate that the Roth portion is not taxable?

Distributions from a Roth 401(k) are not subject to Roth IRA ordering rules.  Nonqualified distributions from Roth 401(k)s as in this case are always a proportionate combination of nontaxable contribution basis and taxable earnings.  A nonqualified distribution from a Roth 401(k) can only be entirely nontaxable if the Roth 401(k) consists of only contributions and no earnings, which can only happen if the Roth 401(k) has not gained in value due to bad investment performance.

 

IRS Pub 590-B has nothing to do with Roth 401(k)s.  It only applies to IRAs.

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