1099-R and Transfer

[WayneD77]

My Wife received Form 1099-R for distribution on IRA Account to direct rollover to her New Employer.  The Form 1099-R has Code H in box 7 (Distribution Code) and the "IRA/SEP/SIMPLE" box is checked.  The Tax now shows we owe a large Tax Amount.  Should she have receive another form from her current Employer, where she had directly rollover this distribution? How do we offset the 1099-R so that it will show she have not actually withdrawn her IRA Account?

[DianeC958]

No, the code indicates a direct rollover over a Roth Account to a Roth IRA account.  None of the distribution is taxable.

The amount on the 1099-R should appear on line 4c and line 4d, on your form 1040 should be blank.

Please review your answers to the additional questions to indicate that she did not cash this account out.

@WayneD77

[dmertz]

Contact the payer to obtain a corrected Form 1099-R.

A code H Form 1099-R reports a rollover from a designated Roth account in the qualified plan like a 401(k) at her old employer to a Roth IRA, not to an employer-provided plan, and must NEVER have the IRA/SEP/SIMPLE box marked; it's the improper marking of the IRA/SEP/SIMPLE box on the code H Form 1099-R that is causing TurboTax to treat this as taxable.  Direct rollovers from a designated Roth account in an qualified retirement plan to a designated Roth account in another employer-provided retirement plan are to be reported with codes B and G together (an no marking of the IRA/SEP/SIMPLE box); no other type of rollover of Roth funds between employer plans is permitted.

[WayneD77]

Thank you for replying @DianeC958 does this mean she should have received another form from her current employer?  The IRA company sent her a check and she mail that check to her current employer to contribute to her 401 (k).  Beside from her W-2, she did not receive any other forms.

[WayneD77]

Thank you @dmertz, we will contact the payer.

[dmertz]

The receiving employer plan provides no reporting of receipt of a rollover from a designated Roth account in a qualified retirement plan.

Assuming that the money actually did come from a designated Roth account in the previous employer's plan as suggested by the code H, make sure that the money was deposited into the designated Roth account in the new employer's plan.  However, for such a rollover to be permissible, the check was required to have been made payable to the new employer's plan for your wife's benefit, not to your wife herself.  If the check was made payable to your wife, the only permissible rollover was to a Roth IRA, and in that case the code on the Form 1099-R should have been code B, along with code 1 if your wife was under age 59½ at the time of the distribution from the old employer's plan.