Rollover IRA & Roth IRA

Forum|Forum|4 years ago
March 22, 2022
11 replies
67 views

In March of 2021 I rolled over an old employer IRA Company 1 with $5000 in Reg IRA and $10,000 in Roth IRA. These were supposed to go into matching accounts in a new Fund Company. The new Fund company switched the amounts and put the $5000 into the Roth and the $10,000 into the Reg IRA. This was found out when I received the 1099R from Company 1. Any advice what we need to report this year and how to correct it later? What will be the tax penalty if any?

TurboTax Business Windows

DanaB27

Employee Tax Expert

To clarify, did the company say they will correct the issue and issue corrected Forms 1099-R? The funds going to the Roth IRA were after-tax funds? If yes, the rollover and the conversion of after-tax funds would not be taxable, so there shouldn't be a penalty.

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PJCinAKAuthor

Level 2

Thanks, DanaB27: Company 1 from their perspective reported it correctly on the 1099R, the amounts and the IRA designation, so really the 1099R has what it supposed to be, company 1 did not have control over the funds after they sent them out, its the company that deposited the rollover that made the mistake. So why should they correct it? Company 2 said they would move over the corrected amount from reg IRA to Roth, but to see first what we needed to do for tax reporting. What would I need to report on taxes and how?

DanaB27

Employee Tax Expert

Sorry for the misunderstanding. If the second company will fix the error then you can use Form 1099-R from company 1 to enter the transaction into TurboTax.

You might have to split the Form 1099-R and enter two Form 1099-Rs, one for the rollover and one for the conversion, for TurboTax to handle this situation.

Click on "Search" on the top right and type “1099-R”
Click on “Jump to 1099-R”
Enter the first 1099-R for the rollover into the traditional IRA:
1. Box 1 Enter amount send to traditional IRA
2. Box 2b check
3. Box 5 blank
On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
On the "Did you move the money to a Roth IRA?" screen answer "No"
Enter a second 1099-R for the conversion to Roth IRA:
1. Box 1 Enter amount send to Roth IRA
2. Box 2b check
3. Box 5 enter amount listed on Form 1099-R
On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
On the "Did you move the money to a Roth IRA?" screen answer "Yes"