My 1099-R form has an incorrect value in Box2a. How can I correct this?

[DaveF1006]

Here is my my suggestion as a tax professional. Enter the 1099-R as it is recorded. Then offset the income by doing this. 

1. Go to federal>income and expenses>all income>>show more 
2. Less Common Income> Start
3. Miscellaneous Income,>start
4. Other reportable income>start
5. Next screen asks Any Other Taxable Income>yes
6. in the description area, be as detailed as possible. Brief but to the point.
7. Now enter the taxable income in Box 2a of the 1099 as a negative number with a minus sign in front of the amount.

Keep all of your documentations and letters regarding this event. Be sure to document your conversations with Morgan Stanley and their refusal to issue a corrected 1099. Also keep a copy of this advice that I have just given you. Keep all of this in your tax return folder just in case if the IRS inquires about this reporting because you will want to be fully prepared and ready to state your case if you are asked to do so.

[dmertz]

queenvic8940, your Form 1099-R is correct.  On your tax return you need to report as a rollover the amount repaid.  To do so you must delete any entry you have already made of this Form 1099-R, enter the Form 1099-R exactly as received, indicate in the follow-up that none of the distribution was an RMD, then indicate the amount moved back to the IRA as a rollover.

[dmertz]

DaveF1006's approach works in many, but not all cases because your tax return still shows a retirement distribution despite the distribution being undone by the repayment.  The presence of the distribution can impede TurboTax's ability to properly calculate a Retirement Savings Contributions Credit for some of those who qualify.  Reporting the repayment as a rollover avoids any such negative side-effects.

[sospisak]

Glad I found you all! Hope I can join in on this conversation because I am so lost.

I have two 1099’s. The first one was from the 401K of my former employer. I rolled that money over to a traditional IRA (second 1099).   This traditional IRA was later converted to a Roth.

So the problem is that it looks like I’m being taxed on both 1099s- the initial from the old employer and the new from the new brokerage.

The most current 1099 (second one) makes sense. I have a distribution code of ‘2’ and the 2A is taxable.

But it’s the first 1099 I’m stuck on. It shows distribution code of ‘G’ which makes sense. But it also shows the same taxable Income in box 2A.

So, my question is, should I have received taxable income (box 2A) on my first 1099 if I rolled that over to the traditional IRA?

I called my former employer, but they said they can’t do anything since the money is no

longer with them.

Please advise.

[dmertz]

The nonzero amount in box 2 implies that code G Form 1099-R from the 401(k) is reporting a rollover from the 401(k) directly to a Roth IRA, which is not what happened.  If your requested that the 401(k) perform a direct rollover to a Roth IRA, then the Form 1099-R reflects what you requested and the deposit of this into a traditional IRA was a mistake.  If you instead requested that the 401(k) plan make the rollover be to a traditional IRA, the 401(k) plan has improperly prepared the Form 1099-R.

In either case you'll need to file a substitute code G Form 1099-R showing $0 in box 2a and explaining that the rollover was to a traditional IRA, not to a Roth IRA.

The check or transfer for a proper direct rollover specifies the account (or at least the type of account, traditional or Roth) that is to receive the rollover.  However, these often do not specify the account, or if they do the specification is ignored, the rollover ends up in the wrong type of account and the Form 1099-R doesn't reflect that the rollover was deposited into the wrong type of account.

[sospisak]

Wow. Thank you so much for explaining that so well!

How do I file a substitute code G form 1099-R? Do I just find a blank 1099-R and fill it out and make a comment at the end of the form?

[dmertz]

When entering the 1099-R into TurboTax, TurboTax has a checkbox to mark to indicate that you need to file a substitute Form 1099-R.  In the CD/download version of TurboTax it's on the Tell Us Which 1099-R You Have page.  In online TurboTax its on the Do any of these situations apply to you page.  Enter $0 in box 2a, leave everything else the same, mark the checkbox, then enter your explanations.

[sospisak]

Thank you so much @dmertz for your help. You have saved me from a major headache. Have a wonderful 🙂

[Cowtech]

I have an Annuity that was funded with after tax money.  Every year I have gotten a 1099-R which shows the amount distributed that year.  In box 2a it shows no amount.  Box 7 shows 7D.

This year they put the same amount in 1 and 2a.  What to do, I should not have to pay taxes on the distribution as taxes have been paid.  They have done it OK for the last 6 years.

[dmertz]

@Cowtech , is this a deferred annuity that has not yet been annuitized?  If so, it's possible that in past years that the balance to your credit was less than your investment in the plan and your distributions consisted entirely of a return of part of your investment in the plan and this year there was a gain in value of more than the amount distributed and therefore distributions were a distribution of taxable gain instead.  When distributions are made before the contract has been annuitized, taxable gains come out first and only after all of the gains have been distributed do distributions consist of a return of your investment in the contract.

Is box 2b Taxable amount not determined marked?

Was box 2b Taxable amount not determinedin the past?

[mjckhc]

Hello:

On my form 1099-r of which mine is for pensions-box 1 has gross distribution but box 2a taxable amount has no amount and 2b taxable amount not determined has an x. Box 4 does have federal income tax withheld amount but do I have to do anything about box 2a? They didn't enter box 2a last year or previous years as they just enter the x in box 2b.

[DianeW777]

Yes.  If you contributed 'after tax money' (money you paid tax on) to the retirement plan when it was contributed, then you must figure out your taxable amount. If you did not contribute to the plan at all then all of it is taxable.

If all of the money contributed to the plan was tax free, such as a 401(k) then all of it is taxable (not a Roth IRA). 

If it is an IRA and some of the money was tax free when contributed then you might have 'nondeductible contributions' which would mean some of it would be taxable and some would be tax free at the time of distribution. The answer assumes this is not a Roth IRA.

Retirement age depends on your plan or 59 1/2 for a traditional IRA.  

• IRS Retirement-A Taxing Matter
• IRS Retirement FAQs

If you have no knowledge or data about what you may have contributed to your retirement plan then all of it is taxable.

@mjckhc 

[mjckhc]

Hello:

Thank you but this is a pension of which get paid to checking account each month.

So what happens in that case as each year they don't put anything in box 2a but put in box 2b the x and

they said the 2a is the amount usually but are not obligated to fill that out. 

[BillM223]

When box 2a is empty and box 2b is checked (taxable amount not determined), this means that the plan administrator does not believe that they have enough information to calculate that amount of the distribution that is taxable. 

As you proceed through the interview, TurboTax will ask you a number of questions so that it can use the Simple Method (normally) to calculate the taxable amount. Why is this necessary? Because if you have after-tax dollars in the plan (called "basis"), then this amount is spread out over a period of time and returned to you. That is, if a typical monthly payment is $1,000, then $50 of that payment may be return of basis and not taxable, so the taxable amount for that month would be $950.

Prior to a few years ago, plan administrators were not required to track such after-tax contributions when the plan was bought or sold.

If you have no after-tax dollars in your plan, then the taxable amount will be the same as the distribution...but TurboTax has to ask for your benefit (many people end up paying tax on such dollars twice because they don't know any better).