Why is the amount I rolled over from my retirement plan considered TAXABLE income?

[ChristyW · Accepted solution]

If it is a direct rollover it is not taxable. According to the IRS, a rollover occurs when you withdraw cash or other assets from one eligible retirement plan and contribute all or part of it, within 60 days, to another eligible retirement plan. However, you must include in income in the year of the distribution the taxable amount of a distribution that you do not roll over. The taxable amount of the distribution will be any portion of the distribution that was not previously subject to federal income taxes. (For example, any post-tax contribution will be considered tax-free distributions).

This IRS link provides additional information about an IRA Rollover

You should receive Form 1099-R from the distribution entity that will include information about the amount of the distribution and coding of the distribution in box 7.

To report this IRA Rollover in TurboTax, log into your tax return and type "IRA Rollover" in the search bar then select "jump to IRA rollover". TurboTax will guide you in entering this information. (See attached screenshot) 

Note: You do not need to enter the IRA anywhere else. Entering it as an additional contribution will cause it to appear that you over contributed, and a penalty will apply.

[wardo211]

then why does it come up as total income?  thats what im seeing and its freaking me out.  

[VolvoGirl]

If you are looking at a summary screen or review screen those show the full amount as income and lump a lot of stuff together. You need to check the actual 1040 form and make sure it's right.

If you rolled it over it should say Rollover to the left of the taxable amount on 4b or 5b.   

[wardo211]

its more about on the turbo tax software.... when you finish all the income inputs...  mine is very simple i just have a W-2 and this year b/c i rolled over a 401k plan from a previous employer to my new one... i got 2 1099-R forms (not sure why? i will have to call the group Principal and ask why they broke it up into two roll over amounts, one form had a designation of G and the other GB)   

I obviously did not take any of that money out of the 401k to use... but on the income summary screen (when it compares to the previous year) its counting that roll over as income.

[VolvoGirl]

Yes it shows it all there, like I said.  You need to check your actual 1040 return.   Are you using the Online version or the Desktop CD/Download program you installed on your computer?

For Online. Before filing,  You can preview the 1040 or print the whole return

https://ttlc.intuit.com/community/accessing/help/how-do-i-preview-my-turbotax-online-return-before-f...

In the Desktop program switch to Forms and open the 1040.

[wardo211]

im using the desktop version.

when im all done i will check at the end

thanks