topic Why am I being taxed $800.00 on a rollover from a 401(k) to an IRA? in Retirement tax questions

Why am I being taxed $800.00 on a rollover from a 401(k) to an IRA?

missyabrown — Mon, 15 Mar 2021 21:31:32 GMT

Both were traditional (not Roth)

Re: Why am I being taxed $800.00 on a rollover from a 401(k) to an IRA?

RayW7 — Mon, 15 Mar 2021 21:58:01 GMT

If you roll over funds from a 401(k) to a traditional IRA, and you roll over the entire amount, you won't have to pay taxes on the rollover. Your money will remain tax-deferred, and you won't be taxed on it until you withdraw money from it permanently.

Did you do a trustee to trustee transfer and did you receive a 1099-R with Box 7 marked as G? If both of these items are correct it should show up as not taxable.

Revisit your 1099-R interview questions to verify there are no errors.

You should have received a 1099-R tax statement for this transaction to be entered in the following area in TurboTax Online:

Click My Account (Top right of your screen).
Select Tools.
In the pop up window, select Topic Search.
In the search bar, type in 1099-r
Highlight it and select GO, and follow the prompts

If you rolled over your 401(k) to the Traditional IRA "trustee to trustee" (without ever having actually received a check) the rollover will not be taxable, but the 1099-R should be reported.

If Box 7 is not marked with G you should contact the payer and have this corrected.

Re: Why am I being taxed $800.00 on a rollover from a 401(k) to an IRA?

missyabrown — Mon, 15 Mar 2021 22:05:25 GMT

I did receive a check. The old holder of the 401(k) sent me a check directly, made out to the institution of the new IRA, FBO me, for me to then forward on to the new institution. The 1099-R has G marked. I actually have a few 1099-Rs for various rollovers. They all have G in box 7. I tried inputting them into TurboTax in different orders. No matter the order, the first one entered results in an even $800 being added to my tax liability.

Re: Why am I being taxed $800.00 on a rollover from a 401(k) to an IRA?

missyabrown — Mon, 15 Mar 2021 22:16:16 GMT

Aha! I just noticed there is a known issue. Apparently when the taxable amount in box 2a is $0, TurboTax is somehow including income for some users. Thanks for your help!