In December 2018 I made an in-plan conversion of funds within my 401(k) plan, from original non-Roth to Roth. Just as with a Traditional to Roth IRA conversion, I know the money converted will be taxed as ordinary income.
But, I can't figure out where to report it in TurboTax. I can't even find a web reference stating which IRS form to use. It's most likely Form 8606, Lines 16 and 18. But all the text there is specific to IRAs, with no mention of 401(k)s, which concerns me.
Form 8606 takes me to creating a Form 1099-R, since the financial institution hasn't sent one. There I entered the $$ in Box 1 Gross Distribution and in Box 2a as the Taxable Amount. In Box 7 I selected '7' for the 1st code (normal IRA distribution), and left the 2nd code blank. This resulted in Box B4 showing the conversion $$ amount, and I checked the box under that.
On Form 1040, the conversion $$ amount appeared in Line 4b as I think it should.
Does anyone actually know - as opposed to guessing like me - the correct place / codes etc?
If the In-plan Roth Rollover occurred in 2018, your 401(k) plan is required to have issued to you a 2018 Form 1099-R reporting this. It must have code G in box 7.
If you don't have the Form 1099-R from the plan, contact them to obtain the missing form. Don't try to complete the 1099-R entry without it. (If you haven't received the Form 1099-R, it might be because the transaction did not occur until 2019, in which case it's 2019 income, not 2018 income.)
If the In-plan Roth Rollover occurred in 2018, your 401(k) plan is required to have issued to you a 2018 Form 1099-R reporting this. It must have code G in box 7.
If you don't have the Form 1099-R from the plan, contact them to obtain the missing form. Don't try to complete the 1099-R entry without it. (If you haven't received the Form 1099-R, it might be because the transaction did not occur until 2019, in which case it's 2019 income, not 2018 income.)
Your answer is regarding In-Plan Roth Rollover, and the question was about In-Plan Roth Conversion. Are these the same thing, just different terminology? I am used to conversion meaning "to Roth" and rollover meaning "traditional to traditional or roth to roth." If so, what do you do if your incompetent 401k administrator refuses to give you a 1099R and you need to file? I don't see a "substitute form 1099R" box to check.
@qofmiwokA in plan Traditional 401(k) to 401(k) Roth rollover *is* a conversion.
They do not have an option to not issue a 1099-R - that is required by law by January 31 following the year of the rollover/conversion.
In the language of the tax code, the term "conversion" is only used for moving money from a traditional IRA to a Roth IRA. Any movement from a traditional account in a qualified retirement plan like a 401(k) to a Roth account, either in-plan or to a Roth IRA, is a technically a rollover, not a conversion. The result is essentially the same, but the legal jargon differs.
Because the result is essentially the same, TurboTax tends to refer to any of these types of movement of funds from a traditional account to a Roth account as a "conversion" even though that is technically a misuse of the term in the case were the distributing account is a traditional account in a qualified retirement plan. In answers that I provide, I try to used the correct legal terminology rather than common misusage, except in cases where I'm referring to specific text in TurboTax.
Any movement of funds from the any account in the 401(k), including an In-Plan Roth Rollover, constitutes a reportable distribution for which the plan is required to issue a Form 1099-R for the year in which the distribution occurs. The "I need to prepare a substitute 1099-R" box is on the page where you identify the type of 1099-R you are entering.
I understand. But what if you can't get them to do it? How many hours are you required to spend trying to make it happen?
There is no set amount of time. The IRS frowns on entities failing to generate required Forms 1099 and W-2, so contacting the IRS as indicated in Tax Topic 154 might result in the IRS contacting the plan:
https://www.irs.gov/taxtopics/tc154
Otherwise, submit the substitute Form 1099-R (Form 4852) on which you are asked to describe your efforts to obtain the required form. I believe submitting the substitute form precludes e-filing, so you'll have to mail your tax return.
I have the same exact problem, and I don't know what codes I need to use when converting a portion of 401k to Roth 401k (Not IRA!). Which codes did you end up using?
Thanks!
After about 50 phone calls and messages, I finally got my 1099R. But I can't believe this, I was just looking at it to tell you the boxes, and it's wrong! The amount of the conversion goes in Box 1. But they put a letter G in my Box 7 and checked the IRA/SEP/Simple next to it. So I'm back to the drawing board! And sorry, I don't know exactly what it should look like.
I know all of my rollover is taxable as income, but when I use code G, Turbotax tells me I don't owe anything which is wrong. I don't have any IRA/SEP/Simple accounts!
My bank refuses to send me a 1099-R for 2018 even though the rollover was done on Dec. 28 2018.
@ari444 If this was a direct 401(k) to Roth IRA rollover/conversion and you never say the money then the 1099-R should have a code G in box 7, the amount of rollover in box 1 and 2a unless the 401(k) contained after-tax money that is not taxable, then that would be in box 5 which reduces the box 2a amount by the box 5 amount. The IRA/SEP/SIMPLE box is never checked for a 401(k).
OK, from the IRS instructions for 1099R: "For a direct rollover of a distribution from a section 401(k) plan, a section 403(b) plan, or a governmental section 457(b) plan to a designated Roth account in the same plan, enter the amount rolled over in box 1, the taxable amount in box 2a, and any basis recovery amount in box 5. Use Code G in box 7." There is no way eTrade will turn mine around in 2 weeks so I guess I'll be doing a substitute one also.
@ari444 wrote:
My bank refuses to send me a 1099-R for 2018 even though the rollover was done on Dec. 28 2018.
What was done on Dec. 28, 2018? Is that when you deposited the check form the 401(k) plan made out to your IRA in the bank or is that when you instructed the 401(k) plan trustee to make the transfer to the bank?
Your bank does not send the 1099-R that is sent by the 401(k) plan trustee.
If you took the rollover distribution form the 401(k) in 2018 then you should have received a 1099-R form from the 401(k) plan trustee no later then Jan 31, 2019. If you did not receive it then contact the 401(k) plan trustee.
@qofmiwok -See my answer to @ari444 . e-trade does not issue the 1099-R - the 401(k) plan administrator does. A 1099-R reports a distribution and yiu took the distribution from the 401(k) plan. The 401(k) plan administrator is required by law to issue the 1099-R no later then Jan 31 following the year of the distribution which would be Jan 31, 2019 for a 2018 distribution. Call the 401(k) plan administrator.
Again, this was not an IRA account. this roll over was from a 401k to Roth 401k. No IRA accounts involved.
I made the request online on Dec 28th, 2018, and it was completed on the same day based on their own records and confirmation. They claim I missed the deadline by one day (Dec 27), so they're reporting it for 2019! This is wrong! As far as IRS, if it was dated prior to Dec 31, it must be reported for that year.
@ari444 wrote:
Again, this was not an IRA account. this roll over was from a 401k to Roth 401k. No IRA accounts involved.
I made the request online on Dec 28th, 2018, and it was completed on the same day based on their own records and confirmation. They claim I missed the deadline by one day (Dec 27), so they're reporting it for 2019! This is wrong! As far as IRS, if it was dated prior to Dec 31, it must be reported for that year.
(And I meant to say 401(k) Roth, not Roth IRA).
That is very common and normal for the plan documentation to say that it is the posting date that is reported which can take 2-3 days. Since Dec 28 was a Friday, and Monday was a holiday then the posting date would be Jan 2, 2019. That is not unusual at all. That is why I always tell everyone to never wait to the last business day of the year or it will not get posted to the next year and the IRS will go by the year on the 1099-R form.
Mine is a solo 401k with eTrade; they are my plan administrator and issue all the tax forms. They just don't seem to know what they are doing. First they issued a 2018 5498, which they acknowledged was wrong. Then after months and months of saying it was in process, they finally issued this 2018 1099-R last week which is also wrong. I know they were "required" to issue one by Jan 31, 2019, but it's not like I can make them do this right. I have contacted them dozens of times and they just seem to pass the information along to someone else. Maybe it's outsourced but I don't know who it's outsourced to.
@qofmiwok wrote:
Mine is a solo 401k with eTrade; they are my plan administrator and issue all the tax forms. They just don't seem to know what they are doing. First they issued a 2018 5498, which they acknowledged was wrong. Then after months and months of saying it was in process, they finally issued this 2018 1099-R last week which is also wrong. I know they were "required" to issue one by Jan 31, 2019, but it's not like I can make them do this right. I have contacted them dozens of times and they just seem to pass the information along to someone else. Maybe it's outsourced but I don't know who it's outsourced to.
You can prepare a substitute 1099-R as dmertz said above. Select the "I need to prepare a substitute 1099-R" box in the 1099-R type screen. The interview will ask for an explanation as to why you are using a substitute,a then ask the steps that you took to get it corrected. Just repeated what you said above.
(Personally I would find a different trustee that knows what they are doing to administrate my account.)
ari444, I agree with macuser_22. For the distribution to have been a 2018 distribution you were required to comply with the processing requirements of the administrator which can include a reasonable delay in processing the distribution. Since the administrator did not process the distribution until 2019, it is a 2019 distribution, reportable on your 2019 tax return.
qofmiwok, the behavior of e-trade suggests that they believe that the account is not a solo 401(k) but is instead a traditional IRA, perhaps a SIMPLE IRA or SEP-IRA. If that's the case and they believed that you had done a trustee-to-trustee transfer of the account to another traditional IRA, it's not reportable and no Form 1099-R would have been issued. This is supported by the fact that they at one point issued a Form 5498 pertaining to this account. Presumably you completed and provided them with a signed 401(k) plan agreement, but perhaps whoever set up the account in the system created it as an IRA and not a 401(k) account. If it was in their system as an IRA, though, there is no way that they could have processed an in-plan rollover, only a Roth conversion from a traditional IRA to a Roth IRA. Are you sure that the account that received the rollover is a Roth account in the 401(k)? Regardless, there are no circumstances where a Form 1099-R is ever permitted to have code G in box 7, the IRA/SEP/SIMPLE box marked and anything other than a zero in box 2a and a zero of blank box 5. A Form 1099-R with code G in box 7 and the IRA/SEP/SIMPLE box marked indicates a nontaxable rollover from a traditional IRA to a traditional account in a 401(k) or similar qualified retirement plan.
Thanks, that is an interesting idea that the account may be coded incorrectly. I will ask them to check that. They all think it's a 401k when they look at it, but incorrect coding could explain why tax forms keep spitting out wrong. It just doesn't seem feasible that with all the 401k's they must administer, someone there wouldn't know how to do this.
I have no IRA's there, just a solo 401k with a traditional and a Roth option. So there's no way they could have done a rollover or rollover/conversion to an eTrade IRA rather than an in-plan conversion.
However the conversion was done in 2018 and in 2019 I did a rollover of the converted amount to an IRA at another custodian. Maybe somehow they have co-mingled the two somehow through their coding. I will have them look into this. Thanks!
I understand that it "could" take 2-4 days to process, but mine didn't. It said so on my confirmation page before I placed the order, and it said so after it completed on Dec. 28. So the distribution did complete on the 28th, not Jan. 2nd. In fact, on my confirmation letter, it says: "To determine if a payment from your Roth account(s) is qualified, your Roth Begin Date is December 28, 2018.".
They're going by the own made-up cut-off date, instead of the actual conversion date.
If that confirmation letter is accurate, it seems pretty clear that this was a 2018 distribution required to be reported on a 2018 Form 1099-R. It's obvious that the funds can't be contributed to the Roth account before they are distributed from the traditional account. However, the confirmation letter from the plan administrator may or may not be sufficient to satisfy the IRS that the distribution year or the Roth beginning year is 2018 if the distribution is reported on a 2019 Form 1099-R.
(The actual date for the beginning of the 5-year period for Roth account qualification purposes is January 1 of the year you first contributed to the Roth account, so stating it as December 28 is a bit misleading. Perhaps this is just another indication of the competence of the plan administrator.)
Did an in-plan 401(k) "conversion" (I know it is technically a "rollover" but am using the TurboTax language) from an after-tax contribution account with earnings in my 401(k) to a Roth 401(k) account within the same 401(k). For federal purposes I show the gross distribution as the entire amount of the after-tax contributions plus earnings, and the taxable amount as just the earnings (not the contributions, since they were already taxed federally).
I'm confused, though, as to the NJ treatment. TurboTax currently seems to be reporting the entire gross conversion amount as taxable NJ income, not just the earnings. I know there are special rules in NJ for pension distributions (the "general" rule and the "3-year" rule) that reduce this, but am not clear if these apply to an in-plan Roth conversion of after-tax contributions.
Can you point me in the right direction on what to look at? Thanks!