Possible wrong info on 1099R

[KP307]

I had a direct rollover to my bank from my retirement fund. I just received my 1099R and it has the amount of the gross distribution on line 1 and the same amount is on 2a taxable amount. Shouldnt this be blank because it was a direct rollover to my traditional IRA at my bank. The distribution code on Line 7 is G which is correct because the check was made out to my bank and rolled over to my IRA. What should I do??

[DanaB27]

Please enter Form 1099-R as shown, the code G in box 7 will indicate that this was a direct rollover. A rollover to a traditional IRA is not taxable. To ensure the rollover is correctly entered into TurboTax, TurboTax will ask you the follow-up questions after you entered the Form 1099-R:

1. Click on "Search" on the top right and type “1099-R” 
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
5. On the "Did you move the money to a Roth IRA?" screen answer "No"

Please be aware that the whole distribution will show as income in TurboTax on the summary screen which shows gross income, not taxable income. To verify that the entry is correct please look at form 1040 line 5b (taxable amount), it should show $0 and state ROLLOVER next to it.

To preview Form 1040 in TurboTax Online:

1. Click on "Tax Tools" in the left menu
2. Click "Tools"
3. Click "View Tax Summary" in the Tool Center window
4. Click on "Preview my 1040" on the left

[dmertz]

This Form 1099-R is reporting a taxable direct rollover to a Roth IRA, not to a traditional IRA.  If you requested that the plan make the direct rollover to a traditional IRA, contact the plan to obtain a corrected Form 1099-R showing $0 in box 2a.  If the rollover was indeed to a Roth IRA, the rollover is taxable as shown in box 2a.

If you instead requested a direct rollover to a Roth IRA but mistakenly deposited the funds into a traditional IRA, the plan is unlikely to issue a corrected Form 1099-R but you should request one anyway.  If they refuse to provide the correction, you'll can file a substitute Form 1099-R (Form 4852) showing $0 in box 2a and explaining that the deposit was made to a traditional IRA, not to a Roth IRA, and therefore nontaxable.  Filing a substitute Form 1099-R will preclude you from e-filing.

Entering the Form 1099-R as described by DanaB27 will prevent TurboTax from including the box 2a taxable amount from Form 1040 line 5b, but the IRS is likely to question the omission of this taxable income from your tax return and issue to you a notice that you failed to claim some income.  You'll then have to explain to the IRS at that time that the rollover was to a traditional IRA rather than to a Roth IRA and therefore nontaxable, despite what was reported on the Form 1099-R.  This approach allows you to e-file and deal with the problem later.