Partial cash distribution of 401K, most rolled over into other IRAs

[GolfnDave]

I cashed out my 401K account.  Most was rolled over into 2 other IRA accounts.  I did take a partial cash distribution, which was taxed for Federal and State.  The total distribution shows on form 1099-R with no Taxable amount.  How do I report the amount that rolled over into 2 other IRAs?  And how do I report the cashed out amount with taxes withheld?

[JulieS]

Yes, you need to report the 1099-R form that you received from the payer. Enter it exactly as it is on your 1099-R

To enter it in TurboTax Online:

1. Open your return. 
2. Select Federal, then Wages & Income.
3. Scroll down to IRA, 401(k), Pension Plan Withdrawals (1099-R), under Retirement Plans and Social Security, select Start or Revisit to the right.
4. Answer Yes to Did you get a 1099-R in 2023?
5. Follow the screen instructions to enter the 1099-R form.
6. When you get to Tell us if you moved the money through a rollover or conversion, select the answer that describes your situation. 
7. When you get to Did you roll over the gross amount of $XXX (Box 1) to another retirement account?, answer No and enter the actual amount rolled over. 
8. Answer the rest of the questions in the section. 
   
    

[GolfnDave]

Working in TurboTax Premier . . . . 

I reported all the info on form 1099-R and that part went okay, but I never saw anything to address the cash distribution amount and taxes withheld from the partial cash distribution.   Form 1099-R makes it look like the Total Amount was rolled over into another IRA (box 7 = G), but that's not the case.  How/where to I enter the Cash distribution and taxes withheld?

[dmertz · Accepted solution]

A direct rollover reported with code-G is required to be entirely deposited into qualified retirement accounts.  If the plan withheld any amount for taxes or the plan distributed some to you in cash, that should have been reported on a separate Form 1099-R with code 1, 2 or 7 and you would need to contact the plan obtain a corrected code-G Form 1099-R and a Form 1099-R with code 1, 2 or 7 for the part not rolled over.

If you yourself inappropriately diverted some of the funds to cash or estimated taxes (not tax withholding), the Form 1099-R is no longer a valid reporting of the transaction.  You would need to submit substitute Forms 1099-R, one with code G for the portion directly rolled over to the traditional IRAs and another with code 1, 2 or 7 for the portion not rolled over.

[normanplace]

I entered the amount of the 401k distribution that was rolled over to the IRA.  However on the tax forms I don not see the taxable portion reduced by that amount.  How do I enter or update the amount so the portion that was rolled over is not part of taxable income?  Is it a bug in TTax 2025?

[RogerD1]

It sounds like you got a distribution from your 401(k) that you partially rolled over to an IRA.  If this is the case, your 1099-R should have been coded with a 1, 2, or 7 in Box 7.  Follow these steps:

1. When you enter the 1099-R in TurboTax, you'll come to a question "Tell us if you moved the money through a rollover or conversion".  Since your received the money, you are required to do the rollover within 60 days in order to make the rollover non-taxable.  If you did rollover within the 60 day time limit, you could click the top choice on this screen "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)".
2. On the next screen, select "No, I rolled over less  than $XX,XXX" if you did not do a complete rollover.  Clicking No will pop up a box to enter the actual amount rolled over.  Enter the amount rolled over, and click Continue.

When you preview your Form 1040, the total distribution of the 1099-R  will appear on line 5a, and the taxable amount (your distribution minus the rollover amount) will be on line 5b.  5c will have box 1 Rollover checked.

[normanplace]

Yes tried all that and it didn’t budge but when I deleted the 1099 and a re-input it it calculated the tax correctly thanks for the help.