How to avoid being taxed on an IRA distribution? I received a 1099-R, but the money was reinvested in an IRA at another institution.

[ddhorst]

I am not of retirement age and not retiring.

[AnnetteB]

When you enter the Form 1099-R that you received for the distribution from your IRA, there will be a series of follow-up questions that you will need to answer. 

One of those questions will be "What did you do with the money from ___?"

The choices on the screen will be either you moved it to another retirement account or you did something else with it.  When you indicate that you moved it to another retirement account you will be given the chance to indicate what type of account the money was moved to.  If you moved a Traditional IRA to another Traditional IRA, then there will be no tax consequence.  If you moved a Traditional IRA to a Roth IRA, then it may be taxable depending on your basis in the account. 

[vu1ture]

Same scenario here...thank you!

However, the withdrawal amount is still being added to my total income - how do I offset that jump in my income because of the 1099-R?

[VolvoGirl]

If you are looking at a summary screen or review screen those show the full amount as income and lump a lot of stuff together. You need to check the actual 1040 form and make sure it's right.

If you rolled it over it should say Rollover to the left of the taxable amount on 4b or 5b.   

[vu1ture]

Thanks so much, VolvoGirl!