Owe money from 2016 for a 1099R Rollover to Qualified plan?

[Indieblue]

We just received a letter stating we owe from a 2016 Rollover.  I entered 1099R information in to Turbotax when we filed it, and checked the box for rollover to qualified plan.  Why do they now say I owe almost $9K in back taxes, interest and penalties?

[macuser_22]

What was the distribution from?
What code was in box 7?
Was the IRA/SEP/SIMPLE box checked?

How did you report it? Was it on line 15a or 16a on the 1040 form with the word "ROLLOVER" next to it?

[Indieblue]

The distribution was from a Simple IRA where the company was purchased/bought out and they transferred to another company (401K).  It was all done internally when the company was purchased.

Box 7 on the 1099R says G and the IRA/SEP/SIMPLE box has an X

No, I entered the 1099R (there are 2 since it was 2 different 'investments').  It shows up on my 1040A under 11A and underneath it states ROLLOVER

[Lisa995]

Code G is an automatic rollover, IRS should have the same thing shown in their records as well, since the payer that issued the 1099R to you, also sent one to IRS....are you sure that the letter is referring to that particular transaction?

[Indieblue]

Yes, Lisa995.  It's the same company, the exact same amount and the correct date.

[dmertz · Accepted solution]

This is not an uncommon situation.  Because a 401(k) plan does not report to the IRS any rollover contributions received by the plan, the IRS sometimes questions that these rollovers were actually completed.  You'll need to respond to the IRS with documentation showing that the 401(k) plan received this rollover.  This documentation would generally be your 401(k) account statement that shows the transaction consisting of the rollover deposit to your 401(k) account.

[Indieblue]

Should I request a 5498 from the receiving company?

[dmertz]

Form 5498 only reports contributions (including rollover contributions) to IRAs.  There is no equivalent form that 401(k) plans generate.  Since 401(k) plans provide no reporting to the IRS of rollovers, the IRS sometimes requires you to provide your own supporting documentation to substantiate the completion of the rollover.

[Indieblue]

Thanks dmertz! We are sending off our documentation today, crossing our fingers that it is enough.  Thanks so much for the help.