Incorrect 1099-R, marked as Distribution Code 1 "early withdrawal" when it really was a rollover to another qualifying plan. Until I can get this corrected, what do I do?

[Flgiirl]

Incorrect 1099-R, marked as Distribution Code 1 "early withdrawal" when it really was a rollover to another qualifying plan. Until I can get this corrected, what do I do?

[BMcCalpin · Accepted solution]

If you "rolled over" the money within 60 days of receiving it, then you can indicate in the 1099-R interview that you rolled it over to a qualifying IRA. This will remove the tax and the penalty.

After you enter the 1099-R (please enter all fields as they are shown on the 1099-R), continue the interview. You will come to a screen entitled "What Did You Do With The Money From [the name of the place on your 1099-R]". On this screen, check that "I moved the money to another retirement account".

Then indicate whether you rolled over some or all of the money.

[dmertz]

The code 1 indicates that this was an indirect rollover, meaning that the money was distributed to you and you subsequently rolled the money over to another retirement account, rather than a direct rollover paid directly by your old plan custodian to the new plan custodian.  As TurboTaxBillMc said, indicating in the follow-up that you rolled over this distribution will cause TurboTax to exclude the distribution from your taxable income and therefore not subject to penalty.