I was laid off. In taking my first withdrawal from my 401k I was told I could only make this one withdrawal and the rest *must* be rolled over into an IRA.
As my unemployment progressed I withdrew from the IRA until it was gone (2018).
I have a job now and want to create a traditional IRA before April 15, 2019 to be attributed to my 2018 tax year for the income deduction.
Did that 401k forced rollover from my 401k to an IRA mean I can't now create one for 2018?
BTW, I only received one 1099-R from Fidelity noted as "G"=direct rollover. I didn't receive a 1099 for the subsequent withdrawals from the IRA.
in order to contribute to an IRA and deduct it you must be within the income bounds that permit that. A retirement plan at work will influence those bounds. put in the contribution and see if TurboTax allows a deduction.
If not, reset it to zero (or make a non-deductible contribution).
1) When you left employment you had a legal choice to take a distribution OR rollover the 401(k) to an IRA. Whoever told you otherwise was either uninformed or misunderstood.
2) If your new job offers a 401(k) then nothing in the past will affect that.
3) You enter the 1099-R with the code G in the retirement 1099-R section and that will be a non-taxable rollover.
4) If you took distributions form the rollover IRA in 2018 then by law, you should have received a separate 1090-R no later then Jan. 31 2019 reporting those distributions. If not, contact the IRA custodian for a replacement 1099-R. Those distributions will be taxable income on your 2018 tax return.
Thank you for your time. I'm so sorry I wasn't clear in my question. Can I still create a traditional IRA, attributed to 2018?
(since my 401k mandatorily emptied to a cash IRA upon my first withdrawal)
For 2015, 2016, 2017 and 2018, your total contributions to all of your traditional and Roth IRAs cannot be more than:
- $5,500 ($6,500 if you’re age 50 or older), or
- your taxable compensation for the year, if your compensation was less than this dollar limit.
(Taxable compensation is generally wages that you worked for - W-2 or net self-employed income minus the deducible part of the SE tax, but can include commissions, alimony and separate maintenance, and nontaxable combat pay ).
A rollover does not count as a contribution.
Thank you do much, macuser_22! That was the answer I was hoping for 🙂 AWESOME - YOU! Thanks, again.
Regarding 1), I suspect that the plan agreement required distribution because the balance was under a certain amount. An auto rollover would be done if no other election was made and the balance was above a certain amount (but below the amount were the money would be permitted to remain in the 401(k)).
Fidelity told me it was an employer choice not to carry the 401k, once a withdrawal was initiated by a past employee. If factual, I presumed it was due to employer administration costs. Had I not needed to take a withdrawal it wouldn't have come up ($30k balance).
To your point, I did have a separate $350. 401k balance returned to me because it was below the minimum $5k required so, yep there is that.
I've confirmed having my 401k rolled over to a cash IRA doesn't preclude me from creating a new IRA for this past year by April 15 for the tax deduction 🙂
My thanks to All.