topic How to report taxable portion of ESOP distribution to Roth IRA? in Retirement tax questions

How to report taxable portion of ESOP distribution to Roth IRA?

Anonymous — Fri, 26 Mar 2021 02:43:06 GMT

I rolled over an ESOP distribution to a Roth IRA. My 1099-R doesn't list any taxable amount (which seems normal based on googling). How do I report that distribution as income to pay appropriate taxes on it?

Re: How to report taxable portion of ESOP distribution to Roth IRA?

macuser_22 — Fri, 26 Mar 2021 03:41:36 GMT

What code is in box 7 on the 1099-R?

What is in box 2a?

Re: How to report taxable portion of ESOP distribution to Roth IRA?

Anonymous — Fri, 26 Mar 2021 13:23:19 GMT

Box 7: G

Box 2a: 0.00

Since the ESOP dollars are pre-tax, and Roth dollars are post-tax, we understand this needs to be reported as income but don't know where to include it.

Re: How to report taxable portion of ESOP distribution to Roth IRA?

macuser_22 — Fri, 26 Mar 2021 15:01:59 GMT

@Anonymous wrote:

Box 7: G

Box 2a: 0.00

Since the ESOP dollars are pre-tax, and Roth dollars are post-tax, we understand this needs to be reported as income but don't know where to include it.

Your 1099-R says that it was a direct rollover to a Traditional IRA and is not taxable.

If you received a check to deposit then it should have been made out to your Traditional IRA and not a Roth.

The IRA custodian should never have put it in Roth. Either that, or the ESOP custodian did not understand that you wanted to to be in a Roth IRA.

It is doubtful that the ESOP custodian will issue a corrected 1099-R at this late date but you should ask them first.

You can delete that 1099-R and enter a "Substitute" 1099-R (there is a substitute choice on the 1099-R type screen). Enter exactally as your 1099-R is but put the same amount as box 1 minus any amount in box 5 amount into box 2a Fill out the required statement that you are using a substitute to change the box 2a amount because the money was actually rolled to a Roth IRA and not a Traditional IRA.