Why is 1099-R rollover (100% 401K to Traditional IRA w/ distribution code G) is still reported as early withdrawal and calls for 10% penalty?

[SabrinaD2]

If your 1099-R has a code G for a 401(k) rollover to a Traditional IRA, it should not cause a 10% penalty. Here's an approach to fix it:

1. Delete and Re-enter: Go to the income section, click on 1099-R, and then click on the trash can icon to delete it. Re-enter the form manually, ensuring all questions about the rollover are answered accurately. This can often resolve the issue.
2. Answer Rollover Questions Carefully: When you re-enter the form, make sure to answer the rollover questions correctly to ensure it's processed as a non-taxable event.

For more guidance, you can refer to:

• IRS Instructions for Form 1099-R

Additional note: Rolling over from a traditional 401(k) to a Roth IRA does not trigger a 10% early withdrawal penalty. However, you may owe income taxes on the amount rolled over because the funds are moving from a pre-tax account to an after-tax account