I understand that my 401K rollover to a traditional IRA is nontaxable income, but why is it still counted as income? The funds did come in but went right back out to a traditional IRA.

Please be aware that the whole distribution will show as income in TurboTax on the summary screen which shows gross income, not taxable income. To verify that the entry is correct please look at form 1040 line 5b (taxable amount), it should show $0 and state ROLLOVER next to it.

 

To preview Form 1040 in TurboTax Online:

1. Click on "Tax Tools" in the left menu
2. Click "Tools"
3. Click "View Tax Summary" in the Tool Center window
4. Click on "Preview my 1040" on the left

 

To confirm you have code G in box 7 of your Form 1099-R? Follow these steps to report the rollover:

 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Enter the information from your 1099-R
4. On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
5. On the "Did you move the money to a Roth IRA?" screen answer "No"