Is my pension rollover to a new 403 b taxable?

[JulieS]

No, it should not be taxable, as long as the conditions for a tax-free rollover are met. 

• The account that receives the distribution must be an eligible plan, 403(b) is an eligible plan.
• The time from when the withdrawal is made until the new account is funded must be 60 days or less.

[kjkogut]

My wife is a retired teacher.  She worked (Jan - May 5 months) last year.  She contributed $2,400 into her 403(b).  I rolled her 403(b) directly into a qualified plan in our Fidelity account.    Turbo Tax says that we do not qualify for the "Retirement savings contribution" credit because we took a distribution (rolled the money to Fidelity).  However, we made a direct transfer from her 403(b) to Fidelity and we never saw the check.  I called the IRS and was told that we should qualify for it...... any suggestions?

[CatinaT1]

Is the contribution listed on her W2 in box 12?  When you say she made a $2400 contribution, I assume that was during the tax year.  

What is Adjusted Gross Income?  If your income is over $64,000, you would not qualify for the credit.

The credit is also non-refundable, which means it can not reduce your tax less than $0.  If your income is zeroed out from your standard or itemized deduction, you would not be able to use the credit.

What I think you are saying is that she made the $2400 contribution during 2019 while she was working and then when she retired, she rolled that $2400 over to another account.  If that is the case, and you have taxable income and are below the income threshold, you should qualify.

This should have automatically calculated if she has an amount in box 12 of her W2, but you can add the Retirement Saving Contributions Credit:

• While signed in and working in TurboTax Online 2019, click on Federal in the black menu on left.
• Click on Deduction and Credits in the upper portion of the page.
• Scroll down and click on Retirements and Investments, Show More.
• Choose Retirement Savings Contribution Credit by clicking on Start or Revisit. 
• Walk through the questions

This IRS link will give you more information:  https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-save...

[kjkogut]

Thanks for the follow up…. Your statement is correct …”she made the $2400 contribution during 2019 while she was working and then when she retired, she rolled that $2400 over to another account.  If that is the case, and you have taxable income and are below the income threshold, you should qualify”.  Our total income is 30k so we are below the limit, but Turbo Tx is saving that we do not qualify for the credit….. I have checked this out repeatedly and always get the sale result…. There is another problem with the software…. It keep asking me about disaster relief funds and when I answer NO it goes into a loop and asks me over and over again and will not advance.

Ken

[CatinaT1]

I would contact TurboTax and connect with a Tax Expert so they can see your screen and see what is happening.  It is hard to tell without being able to see what is happening.

Here is how you can connect with a Tax Expert.