I have a 1099-R from a 401k rollover that partially went into a Traditional IRA

[DanaB27]

Please follow these steps to enter your 1099-R:

1. Login to your TurboTax Account 
2. Click on Search on the top right and type “1099-R”
3. Click on “Jump to 1099-R” and enter your 1099-R
4. Continue "Tell us if you moved the money through a rollover or conversion" and select "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)"
5. Select that less then the full amount was rolled over and enter the amount that was rolled over to the traditional IRA
6. Continue answering the questions.

[togatoga23]

Thank you for your response! Unfortunately, your step 4 does not appear anywhere for me. Any thoughts on how I can access the section that displays the question: "Tell us if you moved the money through a rollover or conversion" and select "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)"?

Thanks,

Tom

[dmertz]

What is the code in box 7 of the Form 1099-R provided by the payer?

Is that IRA/SEP/SIMPLE box marked?

Is any amount shown in box 4?

[togatoga23]

What is the code in box 7 of the Form 1099-R provided by the payer? G

Is that IRA/SEP/SIMPLE box marked? No

Is any amount shown in box 4? No ($0.00)

[togatoga23]

What is the code in box 7 of the Form 1099-R provided by the payer? G

Is that IRA/SEP/SIMPLE box marked? No

Is any amount shown in box 4? No ($0.00)

[dmertz]

The problem is that the entire amount of this distribution was required to have been deposited into the traditional IRA; the IRA custodian erred in allowing you to divert part of it elsewhere.  (Note that if the entire amount was deposited into a non-IRA account before some portion of the distribution was deposited into the traditional IRA, none of the distribution was directly rolled over.)

Under the circumstances, the Form 1099-R is incorrect.  However, because the 401(k) apparently did what you told them to do, they likely will be unwilling to issue a corrected Form 1099-R to reflect what actually happened, but you must try before preparing substitute Forms 1099-R (Forms 4852) to reflect what actually happened.

Two Forms 1099-R will be needed to show what actually happened.  The code G Form 1099-R will need to be changed to reflect the amount actually directly rolled over and a separate code 1, 2 or 7 Form 1099-R (depending on your age and your age when you left service with this employer) will be needed for the portion not rolled over.  (If you were under age 55 in 2020, code 1 will be the code,)   This code 1, 2 or 7 Form 1099-R will have the same amount in box 2a as is in box 1.

Alternatively, as long as the money was deposited into the traditional by the 60th day following the date of the distribution from the 401(k) or, if distributed after January 31, no later than July 15, you can use a single substitute code 1, 2 or 7 Form 1099-R with the entire gross amount of the original shown in both boxes 1 and 2a, treating the entire distribution as an indirect rollover.  You'll then be able to report the distribution as described by DanaB27.

[togatoga23]

I believe the custodian did the rollover correctly. After-tax contributions to a 401k are allowed to be rolled over to a Roth IRA. So what we did was split the account into pre-tax and Roth/after-tax amounts and did 2 separate but simultaneous rollovers. The amounts in box 2a and 5 capture the portion of the account that was never taxed and therefor is eligible to rollover into a Roth with the amount in box 2a representing investment gains on the original after-tax contribution portion of the account.

I did something similar about 10 years ago and had to use another tax service in order to properly file my taxes as TT software seems unable to handle this situation. I'm hoping there is a way to force the software to correctly interpret the 1099-R. Any suggestions?

Thanks,

Tom

[dmertz]

I see.  I incorrectly assumed that the part that didn't go to the traditional IRA went to a non-retirement account.

Under these circumstances I would expect the amount in box 2a to be zero.  If it's not and the sum of the box 2a and box 5 amounts equal the box 1 amount, you apparently requested that the plan roll the entire amount over to a Roth IRA but then diverted part of it to a traditional IRA.

In this case you'll need to split the code G Form 1099-R into two to accommodate TurboTax's deficiency in dealing with this situation, one for the portion rolled over to the traditional IRA and the other for the portion rolled over to the Roth IRA.  Assuming that the portion rolled over to the Roth IRA was at least as much as the amount in box 5 of this Form 1099-R, the entire box 5 amount will go on the form you enter for the portion that went to the Roth IRA and none of the box 5 amount will go on the other.

[togatoga23]

Sorry for the confusion. I think I haven't provided enough information. Let me try to clarify the situation. I did 2 direct rollovers from my 401k; most of my account was pre-tax and was directly rolled over into a Traditional IRA. A small portion of the account was from Roth 401k contributions which had gained in value. The amount in box 5 captures those Roth 401k contributions and box 2a captures the un-taxed gains on those Roth 401k contributions. The sum of the amounts in boxes 5 and 2a is the amount that was directly rolled over to a Roth IRA. Therefor, I should owe taxes only on the amount in box 2a.

I noticed TT is treating it as a distribution from a pension for some reason. I'm wondering how I can correctly show the 2 rollover transactions in TT.

Thanks,

Tom

[dmertz]

Nothing about a rollover from a Roth 401(k) is reportable on a code G form 1099-R.  A direct rollover from a Roth 401(k) to a Roth IRA is reportable on a separate Form 1099-R with code H.

This Form 1099-R is apparently reporting a rollover of an after-tax sub-account in a traditional 401(k) account, not a rollover from a Roth 401(k) account and is reporting that the entire amount was rolled over to a Roth IRA.  My previous reply applies.  However, if the amount in box 2a plus the amount in box 5 does not equal the amount in box 1, the Form 1099-R is bogus.

[togatoga23]

How can I directly edit my tax forms in TT to correctly capture this as an IRA rollover? Thanks!

[togatoga23]

Were you able to determine how to enter the 1099-R info as indicated in step 4? Continue "Tell us if you moved the money through a rollover or conversion" and select "I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days)"

[dmertz]

When splitting the Form 1099-R into two, for the Form 1099-R for the portion that went to the traditional IRA you'll indicate that you rolled the money over.  For the Form 1099-R for the portion that went to the Roth IRA you'll indicate that you converted the money.

[dbrier2]

Just wanted to mention if you see the easy guide button on the screen when entering your data you should hit the guide button. It's a more granular entry with specific questions about cost basis and will give you the correct numbers with Roth money moved and traditional IRA. I had the same issue and spent a long time trying to figure out the tax liability. It corrected my initial entries and saved me a couple of thousand dollars in taxes. 

[dbuck22]

My rollover is being added into my income and it should not be.

My 1099-R form has the following:

Box 1 - it shows my amount

Box 2a - 0.00

2b - Total distribution is checked

Box 7 - G 

IRA/SEP/SIMPLE - Not checked

all other boxes are empty.

I read one of the others posts someone else posted and it you indicated we could choose a rollover to an IRA account.  I cannot find that option.  It just asks if it went into a Roth IRA.

What am I doing wrong?  Thanks!!