topic Re: Retirement Rollover in Retirement tax questions

Retirement Rollover

BradT — Sat, 11 Apr 2020 21:09:50 GMT

I rolled over 3 retirement accounts into 1 place. Turbotax initially calculated tax correctly when I entered the first rollover, but after adding the 2nd and 3rd accounts it changed the tax to my first entry. Here is what happened and my entries:

1. Roth IRA Code J. Amount 2900. I did an indirect rollover. I pocketed 1900, and opened an account and put the remaining 1000 into the new Roth IRA. I indicated that I did contribute the 1000 to a new account in the software. TurboTax calculated the early withdrawal penalty of 190 correctly.

2. I rolled a Roth 401k into a the same Roth IRA. This was a direct rollover with box 7 code H. As soon as I enter this 1099R, it removes the penalty from entry 1. On preview the 1040 the IRA is coded 100% as rollover.

3. I rolled a Traditional 401k into a Traditional IRA. This was a direct rollover with box 7 code G.

I need to know what change is needed to ensure that the 10% penalty on the 1900 I pocketed gets re-calculated back into the return.

Re: Retirement Rollover

macuser_22 — Sat, 11 Apr 2020 21:31:28 GMT

I cannot reproduce that. Are you using online or desktop software?

I suggest deleting the 1099-R's are re-enter starting with the code H.

Re: Retirement Rollover

BradT — Sat, 11 Apr 2020 21:47:43 GMT

TurboTax Online, I deleted them all and I tried the different sequence. Still removes the penalty.

Re: Retirement Rollover

dmertz — Sat, 11 Apr 2020 21:58:47 GMT

Your $1,900 Roth IRA distribution is not subject to tax or penalty.

1. If the basis in your Roth IRA contributions was more than $1,900, you should not have had any tax or penalty on that amount in the first place. Make sure that you have clicked the Continue button on the Your 1099-R Entries page and have entered your basis in Roth IRA contributions and conversions.

2. It is correct that tax and penalty disappeared when you entered the code H Form 1099-R. The amount (apparently more than $1,900) in box 5 of the code H Form 1099-R became contribution basis in your Roth IRAs. This basis was applied against your code J distribution to make it nontaxable and therefore not subject to early-distribution penalty.

3. Your traditional 401(k) to traditional IRA rollover has no bearing on #1 or #2 above.