TurboTax said 1099-R box1 cannot be zero, but it's not a distribution but a 100% rollover

[happydad88]

I received a 2024 1099-R for a 100% rollover from employer 401k Roth to another Roth IRA, with box 7 having code '1B', box 1 $0, box 2 $0, and box 5 $7k.  During fed final review TurboTax reported error for this form, and kept saying this 1099-R box 1 cannot be $0, and must be at least $0.50.  Could this be a bug in TurboTax, since this 1099-R is a 100% rollover, as indicated by box 7 code '1B', and box 1 and box 2 both $0.00.  Appreciate any help.  Thanks.

[DanaB27]

It seems they issued the Form 1099-R incorrectly if this was a direct rollover.

Form 1099-R instructions state: "For a direct rollover of a distribution from a designated Roth account to a Roth IRA, enter the amount rolled over in box 1 and 0 (zero) in box 2a. Use Code H in box 7."

Please contact the issuer to get this Form 1099-R corrected.

[dmertz]

@DanaB27 , this seems to be a Form 1099-R that reports a distribution of unrecoverable basis in the Roth 401(k) because the value of the account rolled over to the Roth IRA (which was likely reported on a separate code H Form 1099-R) was below the contribution basis in the Roth 401(k) at the time of the rollover.

Prior to 2018 this $7,000 could have been claimed as a miscellaneous deduction subject to the 2%-of-AGI floor, but such deductions have been suspended for tax years 218 through 2025.  One might consider adding this $7,000 to Roth IRA contribution basis, but I don't know if that is permitted.  If that was permissible, one would think that this $7,000 would have been included along with the rest in box 5 of the code-H Form 1099-R, but it's also possible that it is reported separately to allow the individual to treat it either way (ignoring the fact that the deduction has been suspended).