401k rolled over to a Roth IRA, never taxed on the amount

[ianw16]

My wife had a 401k from her prior job, after leaving the company she had the 401k rolled over into her Roth IRA plan.  The company didn't withhold the 20% tax so I need to find out what I need to do to correct this.

[dmertz]

What is the code in box 7 of the Form 1099-R provided by the 401(k) plan?
Is the IRA/SEP/SIMPLE box marked?
Is the amount in box 2a zero, nonzero or blank?
Is box 2b Taxable amount not determined marked?
Is there any amount shown in box 5?

[ianw16]

Box 7 is code G
IRA/SEP/SIMPLE box is not marked
Box 2a is $0.00
Box 2b Taxable amount is not marked, total distribution is marked.
Box 5 is blank

[dmertz · Accepted solution]

The Form 1099-R is reporting a rollover to a traditional IRA, not to a Roth IRA.  If this Form 1099-R had been reporting a rollover to a Roth IRA, box 2a would show the same amount as is in box 1.  This seems to be a common issue this year.

You must request that the 401(k) plan correct the Form 1099-R.  If you actually requested that they initiate a rollover to a Roth IRA, they should comply, but often times will not.  If they believe that you requested a rollover to a traditional IRA, they will almost certainly refuse to correct the Form 1099-R.  If they will not correct the Form 1099-R, your only alternative will be to submit a substitute Form 1099-R showing the same amount in box 2a as is in box 1, explain your attempts to get the 401(k) plan to correct the Form 1099-R, and explain why the original Form 1099-R is incorrect.  (I believe that this will prevent you from e-filing.)

[dmertz]

The assumption here is that the rollover was directly from the 401(k) to the Roth IRA.  If she rolled directly from the 401(k) to a traditional IRA first, then converted the traditional IRA to Roth, she would receive a Form 1099-R from the traditional IRA for the distribution and conversion to Roth and it would be this Form 1099-R that would be reporting the taxable conversion.