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janieeli
New Member

Should 1099-r have distribution code 2 if i did a direct rollover from 401k

I rolled over my 401k from a previous job directly to a roth ira. I received my 1099-r which has a distribution code of 2 , early withdrawl.  if i rolled over the 401k wouldn't it be a code G ? and should box 2a have the same taxable amount as box 1. I really don't understand any of this so am open to all explanations . Thank you.

6 Replies
VolvoGirl
Level 15

Should 1099-r have distribution code 2 if i did a direct rollover from 401k

Was your 401k in a ROTH 401K account?  I don't know if you can rollover a regular 401k directly to a ROTH IRA.  ROTH means after tax and 401k contributions are usually pre-tax.  Look on the back on your 1099R it should have instructions and the explanations for all the Codes.  

A rollover from a regular 401K account to a ROTH IRA is actually a conversion and a fully taxable event.  You probably should have rolled it over to a Traditional IRA account to preserve the tax deferred status.  Now it is 100% taxable.  I'll page someone who knows more about that.  @dmertz
SweetieJean
Level 15

Should 1099-r have distribution code 2 if i did a direct rollover from 401k

A direct rollover merely means that the funds went directly from one plan Trustee to another. It does not necessarily mean that the transaction is tax free or tax deferred.
dmertz
Level 15

Should 1099-r have distribution code 2 if i did a direct rollover from 401k

Are you sure that the rollover was from a 401(k) and not from a traditional IRA such as a SEP or SIMPLE IRA employer plan?  Is the IRA/SEP/SIMPLE box marked?  A rollover from a traditional IRA to a Roth IRA trustee-to-trustee would properly have code 2 in box 7 and the IRA/SEP/SIMPLE box marked.
dmertz
Level 15

Should 1099-r have distribution code 2 if i did a direct rollover from 401k

A direct rollover to a Roth IRA is one paid directly from the 401(k) plan to the Roth IRA for your benefit.  If the payment is instead made payable to you and you subsequently roll the distribution over to a an IRA (traditional or Roth) within 60 days, it's an indirect rollover.

A direct rollover from a traditional 401(k) to a Roth IRA should have code G in box 7 and the taxable amount in box 2a.  If you had no after-tax contributions in the traditional 401(k), the amount in box 2a will be the same as the amount in box, 1.  With a direct rollover, one would usually roll over the entire distribution and have no taxes withheld shown in box 4.  With the entire taxable amount rolled over, estimated taxes may have to be paid to avoid a tax underpayment penalty.

SweetieJean
Level 15

Should 1099-r have distribution code 2 if i did a direct rollover from 401k

"no taxable amount shown in box 4.": Do you mean no taxes withheld?
dmertz
Level 15

Should 1099-r have distribution code 2 if i did a direct rollover from 401k

Yes, thanks SweetieJean.  I've corrected that.
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