Should I request a new 1099-R with split rollover money?

[abazba12]

Q: re $2k 1099-R "distribution." Rolled $1K from 401k to Indiv. IRA (diff. trustee) but a direct T-toT transfer. $1000 stayed w/ original trustee of my pretax 401k but converted to a new Indiv. Roth (non-401k). Code in Box 7 is "G." TT is asking me if I converted it to a Roth? I did but only half of it. What should I do...say "yes" or "no?" Also, why are direct Trustee-to-Trustee rollovers of pretax money showing up in the Summary area of Gross Income even if it won't show up on the 1040 as taxable income?!? I need to keep my Gross income under $106,000 to prevent Medicare premiums from increasing. The extra $1,000 pretax direct rollover is through me over the $106,000 Medicare limit. I am hoping this is only in TT and the $106,900 doesn't show up on the 1040 anywhere. Thanks

[dmertz]

It was correct for the 401(k) plan to report this on a single Form 1099-R.  Due to limitations on how you must report this in TurboTax, you must split the Form 1099-R yourself.

The tax code considers the entire amount in box 1 of the From 1099-R to be income, some taxable, some nontaxable.  TurboTax's summary shows the total of taxable and nontaxable income.  Only the taxable income adds to your AGI which is used to determine your Medicare IRMAA.

"The extra $1,000 pretax direct rollover is through me over the $106,000 Medicare limit."

No, it doesn't.  Entered properly by splitting the Form 1099-R, one for the portion that went to the Roth IRA and the other for the portion that went to the traditional IRA, the amount that went to the traditional IRA will not be included on Form 1040 line 4b.

[abazba12]

Thank you. I had thought about doing it that way. Good to know. 🙂

[abazba12]

Ok, I attempted splitting the $2000 1099-R with "G" in Box 7 for the $1000 rollover from trustee to a different trustee and $1000 pre-taxed 401k conversion to a non-401k Individual Roth account within the same trustee. Turbo Tax thinks these entries are duplicate. 

Should I change the Box 7 code from "G"

to "7" and check the IRA/SEP/Simple box for the $1000 Roth conversion money that was converted to ROTH? Also, I put the same account number on both split 1099-R's. Should I not enter the account number on one of these split entries? Lastly, TT asks me if I converted the $1000 of  401k money to a ROTH 401k or 403b and I did not. The ROTH account is with the same trustee but it is not within my pretax 401k. There is no option for converting "pre-taxed 401k money to an Individual ROTH" so should I still click "yes" on the question re 401k to 401k Roth? Thanks!

[dmertz]

"Turbo Tax thinks these entries are duplicate."

Yes, TurboTax can overreact.  You might be able to just ignore the warning about duplicate entries.  If not, you would get the same taxable result by changing one of the forms to have code 7, but I don't know if that would work either.  Since there is no tax withholding, the fact that you changed the code will not be apparent in your filed tax return.  I don't think that TurboTax is looking at the account numbers when inferring that there are duplicates, so I doubt that removing account numbers will help.

To be clear, the forms that you enter should not be identical, but even if they are not identical, TurboTax can mistakenly think that they are.  The original should show $2,000 in box 1 and $1,000 in box 2a.  The form that you enter for the rollover to the traditional IRA should have $1,000 in box 1 and $0 in box 2a.  The one for the rollover to the Roth IRA should have $1,000 in box 1 and $1,000 in box 2a.  (I assume that there is no nonzero amount in box 5.)