Why do I owe taxes on an IRA rollover?

funlakerz · ‎June 6, 2019

I changed jobs and received a 1099-R. The bank statement listed it as a premature withdrawal, and charged an interest penalty of 132. The total amount was rolled over to a new retirement IRA with my new job, however I am being charged $400+ dollars in taxes for the original early distribution. Is this correct? If not, how do I enter the amount rolled over to the new retirement account?

KenH1 · ‎June 6, 2019

Assuming there is a "1" in box 7 of your 1099-R. TurboTax will initially calculate both income tax and an early distribution tax, but you''ll be able to claim an indirect rollover to reverse this.

In TurboTax, enter your 1099-R just as it is issued.

The software will then ask a series of questions so the program can determine if the amount is taxable or not.

At the What Did You Do with The Money screen indicate that I moved the money to an IRA or another retirement account and then select rolled over down below.

There should be no effect on your taxes.

View solution in original post

KenH1 · ‎June 6, 2019

Assuming there is a "1" in box 7 of your 1099-R. TurboTax will initially calculate both income tax and an early distribution tax, but you''ll be able to claim an indirect rollover to reverse this.

In TurboTax, enter your 1099-R just as it is issued.

The software will then ask a series of questions so the program can determine if the amount is taxable or not.

At the What Did You Do with The Money screen indicate that I moved the money to an IRA or another retirement account and then select rolled over down below.

There should be no effect on your taxes.

Why do I owe taxes on an IRA rollover?