IRS says I need to explain my retirement situation in a statement. How do I do that?

[dmertz]

You can get the desired taxable result on your Form 1040 by splitting the Form 1099-R into two parts, one with code 3 for for the portion not rolled over and the other with code 1 for the portion rolled over.  The only difference with an e-filed tax return is, if there is tax withholding shown in box 4, the Form 1099-R on which you include the tax withholding (I would put it on the code 3 Form 1099-R as long as is isn't more than the portion you did not roll over) will be included in your e-filing and won't match the original code-3 Form 1099-R.  That should not be a problem, though, since the amount shown on From 1040 line 5a will be the total gross distribution originally reported.  If you instead mail your tax return on paper, you'll just include the original code-3 Form 1099-R.

[tgmalpass]

@dmertz 

Thanks!  So, should I ask Fidelity to correct the 1099R Forms and split as you suggest?  

[dmertz · Accepted solution]

No, you do not ask Fidelity to change the Form 1099-R they produced.  They won't do that.  Splitting it yourself is only to work around the limitation in TurboTax.

[tgmalpass]

@dmertz 

Thanks so much for your help!