Taxable amount of IRA Distribution

[knoerk711]

I received a 1099-R showing a Gross Distribution of $17,000, with the Taxable Amount not determined box checked.  $3,000 was a loan I repaid, so $14,000 is taxable, which I entered in Box 2a Taxable Amount in TurboTax, but it keeps picking up the full $17,000 in its calculations.  Any suggestions?

[DianeC958]

Remove the check mark from the box, Taxable Amount Not Determined.  When you check this box the program takes the amount in Box 1 as the taxable amount.

[dmertz]

The account from which this distribution was made is apparently not an IRA.  It's probably a 401(k).

You must enter the Form 1099-R exactly as provided by the payer; box 2b Taxable amount not determined must remain marked.

What is the code in box 7 of this Form 1099-R?

What amount, if any, is shown in box 5 of this Form 1099-R?

Regarding the loan repayment, did this repayment occur before or after the $17,000 distribution being reported on this Form 1099-R?

Did you receive a different Form 1099-R with code L in box 7 due to defaulting on the loan, perhaps in a previous year?  If so, what was the amount in box 1 of that Form 1099-R?

[knoerk711]

Tried that, but it's still using the gross amount.

[knoerk711]

I don't have a 401(k), but it could have been a 403(b).  Box 7 has 7 in it and the box next to it for IRA/SEP/SIMPLE is checked.

Box 5 shows $0.00.

I took the loan out in April and paid it back in May; the requirement was that it had to be repaid within 2 months.

I talked to the agent, because I didn't think the $3000 should even show, but he told me that's how they had to account for it.  The repayment is included on a Form 5498 in Box 2 Rollover Contributions.

[dmertz · Accepted solution]

OK, so this is an IRA and the money that you received was not a loan but was instead a distribution (or multiple distributions) of which you rolled $3,000 of one distribution back into the IRA.   (Actual loans are only permitted from qualified retirement plans like a 401(k), not from IRAs.)

A code 7 Form 1099-R for a distribution from a traditional IRA is required to show the same amount in box 2a as is in box 1 and is required to have box 2a Taxable amount not determined marked.  After entering the Form 1099-R exactly as provided by the payer, indicate in the follow-up that you moved the money to another retirement account (or returned it to the same account), indicate that you did a combination of rolling over, converting or cashing out the money, then indicate $3,000 as the amount rolled over.  TurboTax will include the full $17,000 on Form 1040 line 4a but will exclude $3,000 from the taxable amount on line 4b.  TurboTax will also include the "ROLLOVER" notation next to line 4b.