Nontaxable IRA transfer of funds--second request for advice.

[garycarols]

I received a 1099-R for a nontaxable transfer of funds to a QLAC (Qualified Longevity Annuity Contract).  This transfer is nontaxable, but box 2a shows the entire amount as taxable.  I've been going in circles trying to get TurboTax to accommodate the correct, nontaxable amount, with no luck.

I came across TurboTax advice (although I'm not sure it applies to my situation?) to "Separate your rollover and conversion."  It says to remove the 1099-R, then "Split the 1099-R into two 1099-Rs, one for rollover and one for the conversion.  Allocate the numbers on your actual 1099-R between the two new 1099-Rs so that the combined total of them equals the amount on your original 1099-R."  --whew!  I'd be happy to do that if I knew it was the remedy, and if I knew HOW to do it!  So, say my 1099-R shows a gross distribution of $10,000, and a box 2a taxable amount of $10,000.  What number would I put on each of these two 1099-Rs to get the correct information--which would be Box 1 income of $10,000 and box 2a taxable income of $0?

Thank you.  My return is otherwise ready to efile.

[ReneV4 · Accepted solution]

No. You do not have to take those steps.

To report your non-taxable transfer of funds to a QLAC in TurboTax, do the following:

1. Go to Wages & Income
2. Scroll down to Retirement Plans and Social Security and click the down arrow
3. Select IRA, 401(k)...(1099-R) and click Start
4. Click Add a 1099-R
5. Answer the questions regarding the 1099-R, ensuring you complete each box correctly
6. Click on Continue
7. On the, "Tell us if you moved the money through a rollover or conversion", select, "I rolled over...to another retirement account"
8. On the, "Did you roll over all of the $ (Box 1) to another retirement account?" select, "Yes, I rolled over $...to a retirement account"

This will let the IRS know that you rolled the funds over, rather than taking a distibution.