Getting "Double check Box 7 and the IRA box on your 1099-R" for funds moved from T-IRA to T-401K

[nashspear]

I am importing 1099-R information from my IRA brokerage. I rolled funds from Traditional IRA into my employer's Traditional 401k. In 1099-R, IRA/SEP/SIMPLE is checked and Box 7 has the code G. When I enter this in Turbo Tax, I get the following question:

"Double check Box 7 and the IRA box on your 1099-R
You indicated that you converted a traditional IRA to a Roth IRA with Code G in Box 7. However, if this is true it should have Code 1, 2, or 7 instead.
If the money you took out isn’t from a traditional IRA, then the IRA box should not be checked.
If you need to make changes, select Back. If this matches exactly what’s on your form, we recommend you contact your provider to correct it."

Is TurboTax handling the case of transferring from SIMPLE IRA to T-401k incorrectly or is the mistake in 1099-R?

[JulieS]

After the 1099-R is entered, you get the question, "Was this money rolled over to a Roth IRA?" That answer should be No.

Next screen asks, "Did you put this money in a Health savings Account?" That should be No.

The next screen asks, "Was the withdrawal due to a Qualified Disaster Distribution?" That should also be No.

Please review the section and make sure you answered all three questions No. I entered G in Box 7 and checked the IRA box and I got no messages. 

[nashspear]

Thanks for the detailed answer! Yes, I answered 'No' to all the questions you had called out. I still see the same suggestion appearing for me. Can you please check if Box 7 has code: "G" and "IRA/SEP/SIMPLE" is checked?Not sure if it matters, 1099-R also has the following:

2a:  $0

2b: only "Total distribution" is checked.

[Critter-3]

If you moved money out of an IRA then the IRA box would be checked on the 1099-R so it would also be checked in the program ... it does make a difference.  The interview path is different for an IRA. 

[nashspear]

Thanks for the replies. Let me clarify that I am still getting the same suggestion when I run through the process of importing 1099-R into TurboTax. The questions are little different from what's called out in the first response. Here's a more thorough steps I am seeing.

1099-R contains:

2b: Total Distribution is checked

7: Distribution Code: G

     IRA/SEP/SIMPLE is checked

Turbox Tax Questions & Answers provided:

1. Did any funds go into HSA/need substitute/corrected 1099-R - None of these apply

2. Did you move the money to a Roth IRA? - No

After these questions I am seeing the suggestion to Double check the imported file. When I respond 'This is correct', I don't see any additional tax I owe to Federal or State. This is what I expected to see from such a transfer.  just this suggestion from Turbo Tax is throwing me off.

[ErnieS0]

There is no additional tax from rolling a Traditional IRA into a Traditional 401(k). Both are pre-tax retirement accounts.

You would have tax due if you moved money from a traditional tax-deferred retirement account to a Roth because a Roth is an after-tax account, which is why retirement withdrawals from Roth's are tax free.

For more info see What's the difference between a Traditional IRA and a Roth?

[nashspear]

Yes, That's my expectation too. There's no tax implication here. Can Turbotax change the wording on the confirmation page to account for this scenario? esp: "You indicated that you converted a traditional IRA to a Roth IRA with Code G in Box 7". Code G could also mean transfer from T-IRA to T-401k like in this scenario.