Rollover form Employer's Plan into an IRA (IRS publication 590-A)

[MommieG]

Turbo Tax is showing my Rollover from the Gov't TSP to a traditional IRA as non-taxable income.  However, IRS Publication 590-A states "the distribution is rolled over into a traditional IRA, it isn't included in your income."

The rollover amount is showing up on the 1040 as a rollover, but the dollar amount is included in my total income.  This will be an issue in a few years with my social security calculation because this rollover is not income, it was simply moved from one retirement account to another.

I need to know how to fix this in Turbo Tax.  

Thanks so much.

[dmertz · Accepted solution]

All distributions from an employer plan are defined in the tax code as income.  What matters is that the rollover to an IRA makes the income be nontaxable income.  Nontaxable income from an employer plan must be included on Form 1040 line 5a but is excluded from line 5b so that it does not add to your AGI of affect anything else on your tax return.  Because it does not add to your AGI, it does not affect anything that depends on AGI such as Medicare IRMAA.