rollover from 403B to Roth and Traditional IRA

[mklem9]

I was forced to rollover my 403B to other personal accounts after I quit my job. The amount was distributed into two accounts: one Roth IRA and one traditional IRA. Turbotax simply asks me whether or not the distribution amount from 1099-R went to a Roth IRA, but some of the distribution amount went to to the Roth, and some to the traditional. How should I answer the question in Turbotax?

[Critter]

If the 403B had 2 parts ... one pre tax and one post tax then you should have gotten 2 1099-R forms.  Or did you roll the entire amount to the IRA and then converted some/all to the ROTH ? 

[mklem9]

Thanks for your question. The bank just told me on the phone that there was a pre-tax and a post-tax portion to the 403B (I thought it had all been pre-tax but apparently was wrong). The post-tax went to the Roth, and the pre-tax to the traditional. However, they only gave me one 1099-R, with the combined amount (both Roth and traditional) under gross distribution, and with the taxable amount listed as 0. 

[macuser_22]

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@mklem9 wrote:

Thanks for your question. The bank just told me on the phone that there was a pre-tax and a post-tax portion to the 403B (I thought it had all been pre-tax but apparently was wrong). The post-tax went to the Roth, and the pre-tax to the traditional. However, they only gave me one 1099-R, with the combined amount (both Roth and traditional) under gross distribution, and with the taxable amount listed as 0. 

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What code is in box 7?

What is in box 5?

What is on box 2a?

[mklem9]

7: G, and the second box is unchecked

5: blank

2a: 0

[macuser_22]

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@mklem9 wrote:

7: G, and the second box is unchecked

5: blank

2a: 0

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If box 5 is blank then that does not seem to report any after tax money that could be rolled into a Roth IRA.

Before tax money (the box 1 amount minus the box 5 amount) would go to the Traditional IRA and the after-tax money in box 5 would go to the Roth.

How much of the box 1 money went to the Traditional IRA and how much went to the Roth and how is that documented?

The after tax money that went to the Roth is supposed to be in box 5.

[Critter]

Since it was a code G then leave box 2 blank and indicate it was all rolled to an IRA ... don't worry about how much to which since it makes no difference to the IRS.

[mklem9]

Thanks for your help. Another question Turbotax asks is whether I made any after-tax contributions. On the W-2, there is an amount in 12b marked with the code BB (Designated Roth contributions under a section 403[B] plan). Should I list that as an after-tax contribution? Turbotax says that if I enter an amount for this question, it will be like a correction to box 5 on the 1099-R.

[macuser_22]

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@mklem9 wrote:

On the W-2, there is an amount in 12b marked with the code BB (Designated Roth contributions under a section 403[B] plan). Should I list that as an after-tax contribution? Turbotax says that if I enter an amount for this question, it will be like a correction to box 5 on the 1099-R.

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No.  

Your Code G 1099-R is reporting the 403 plan that was rolled to a Traditional IRA.

A Designated Roth contribution to a 403(b) Roth, if it was also rolled to a Roth IRA, must be reported to you on a  separate 1099-R with a code H in box 7.     A designated Roth rollover to a Roth IRA cannot be reported with a code G.   The box 5 I asked about in the code G only applies to after-tax contributions that were in the 403(b) plan itself  not a separate 403(b) Roth - which is always after-tax money.

[mklem9]

Thanks for your continued help. I fear I may have miscommunicated. Thanks for bearing with my lack of understanding.

I did not have two separate 403B plans. My understanding is that it was not a Roth 403B but a regular 403B with some designated Roth contributions under it. When I quit my job, I forced either to roll it over into another personal account or to let them roll it over into a new asset retention account with the same company. They took the one 403B, with some Roth and some non-Roth contributions, and rolled it over into two new accounts, one Roth IRA and one traditional IRA. I got only one 1099-R, with a code G, that lumped all the money into one total distribution as if it all went to a traditional IRA. 

I just spoke on the phone with someone at the company asking either if I should've gotten two separate 1099-Rs or if the one 1099-R should've included an amount in box 5. They said the 1099-R was correct, but the only explanation they could give me for why box 5 is blank is because it is a "plan to plan rollover so nothing is taxable." But they forwarded my case to one of their specialists who supposedly will email me Monday after reviewing my 1099-R.

Based on that clarification, would you say that there should've been an amount in box 5 on the one 1099-R, rather than two separate 1099-Rs? What should I do if the specialist says that everything is correct?

[macuser_22]

There is not such thing as a "403B with some designated Roth contributions under it".  A 403(b) Roth (Designated Roth) is a separate account from a 403(b).  They are two types of 403 accounts.

A regular 403(b) can contain after-tax money, but that is not a Roth, it is simply after-tax money within the 403(b).   When converted to an IRA both the before tax after-tax money can be rolled into a Traditional IRA, or the before-tax can be rolled to a Traditional IRA and the after-tax to a Roth IRA.

However, any after-tax money must be identified in box 5, otherwise it would all be before-tax money that cannot be rolled to a Roth IRA.

And no, you do not need two 1099-0R's from the plan administrator.  You need a single 1099-R that identifies that portion of box 1 went to the Traditional IRA and the portion that went to the Roth IRA - the box 5 does that.  The 1099-R that you have says that it is all before-tax  money and all went  to a Traditional IRA.

(It is TurboTax that requires that *you* enter this as two 1099-R's because two destinations are involved and TurboTax is not capable if doing that with one 1099-R, but the box 5 amount must be resolved first).