I received a 401k distribution check. Can I do an indirect rollover into my IRA?

[navipod]

Hi Everyone,

I received a 'MISTAKE OF FACT' distribution check from my 401k holder (T. Rowe Price) for an incorrect contribution from 2023. It was my employer's error, I believe I was added to the plan earlier than I should have been and this error was found during an audit they did in 2025. The check amount is $1820.44 and I received it on 09/29/2025. The check states that the total taxable amount is $1820.44.

I spoke with my company accountant, T. Rowe Price, and Fidelity (IRA holder) about whether I can do an indirect rollover of this amount to my IRA. This was so I wouldn't have to pay taxes on it and so I could more freely invest it in holdings of my choice. All three parties said yes.

So, I rolled this amount into my IRA within the 60 day window and classified it as a rollover.

However, I did not receive a 1099-R, and I am not sure where how to track this basis for my taxes or where exactly to list it in my TurboTax filing. I called T. Rowe Price, spoke with my company accountant, and called Fidelity. T. Rowe Price and my company accountant stated that I will not get a 1099-R as this money is from 2023. Fidelity stated that the IRS will collect tax on this with I withdraw it from my IRA and so it is fine. 

My questions:

- Did I do this incorrectly? Was this amount not eligible for an indirect rollover?

- Wasn't I supposed to receive a 1099-R? How/where is this basis tracked? All I have showing this amount is the check stub. 

- Do I need to list this in my TurboTax filing? If yes, where?

- If this is all an error, what do I need to do to fix it? This amount is already invested in some holdings. 

[dmertz]

This check was to remove a contribution that your 401(k) account had not been eligible to receive, money that should never have been put into the account to begin with.  As such, this money was not eligible for rollover.  For any money from a 401(k) to be eligible for rollover, it must be reported as a distribution on a Form 1099-R that has code 1, 2, 7 or G in box 7.

Depositing this check into a traditional IRA therefore constitutes an ordinary traditional IRA contribution, not a rollover, no matter how the IRA custodian recorded the deposit and reported it on Form 5498.  On your 2025 tax return you'll need to include it as a traditional IRA contribution under Deductions & Credits.

The $1,820.44 needs to be reported on your 2025 tax return as Other income.

[navipod]

Hi, thank you for your response.

Do you know what section in "Other Income"? I went through "1099-MISC and Other Common Income", however it is not clear to me exactly where this will be notated. 

Furthermore, I also went through "Retirement Plans and Social Security", however this doesn't exactly fit there either. I spoke to my work accounting department spoke with T. Rowe Price directly recently, they are looking to se if I should have received a 1099-R or any other documentation for this. Would you happen to know if I should have received any tax documents for this?

I was able to confirm that I can still change this IRA contribution from a rollover to a 2025 contribution. 

[dmertz]

I would enter it under Less Common Income -> Miscellaneous Income, 1099-A, 1099-C -> Other reportable income.

If this is to be reported on a Form 1099-R, I would expect the form to have code E in box 7.  This was a corrective distribution due to the employer not following the terms of the plan when they allowed a contribution before eligibility requirements were met.  If you receive and enter a code-E 2025 Form 1099-R, you would not enter it as Other income.

You aren't changing this to be an ordinary contribution, it already is an ordinary contribution because it's a failed rollover.  What would be changed is how the deposit is reported on the 2025 Form 5498 for the IRA that received the deposit.

[navipod]

Hi thank you so much for your help!

I called Fidelity last week and it is now reported as a contribution not as a rollover for my 2025 Form 5498.

Another question:

I was able to find 'Other reportable income' and have this amount listed in that box. However, my employer is working with my 401k provider to see if I will receive a 1099-R. My 401k provider is moving slowly on this. Say I do receive a 1099-R but it comes after I file, what changes (if any) would I need to make on my return? Would I need to file an amendment? 

[DianeW777]

Yes, you would need to file an amendment. You have an option of filing an extension, making any payment if applicable, then filing  your tax return after you have the corrected Form 1099-R. This will give you until October 15th to file.

• Free Federal Tax Extension is Available
• How do I file an IRS tax extension?
• Filing an Income Tx Extension

@navipod