topic Re: 1099 R box 2b Incorrect? in Retirement tax questions

1099 R box 2b Incorrect?

WinpakBob — Thu, 30 Jan 2025 21:00:33 GMT

My company has changed the company managing my pension distributions. I received the 1099 R from the "new" provider and box 2b has checked "Taxable amount not determined". This is correct and the "old" provider also always checked this box in previous years. This year however the "old" provider now checked "Total distribution". I am assuming this is because this is they have transferred everything to the"new" provider and closed the account. However this is not my "Total distribution" from my pension. If I use this "Total distribution" checkmark when using TurboTax 2024 it changes my refund higher DRASTICALLY and is probably incorrect. I think if I contact the "old" provider they will say they did indeed distribute the pension (Total distribution) when they transferred it to the "new" management provider. So do I have a problem with TurboTax, or the "old" provider. I would love to take the drastically larger refund using the "Total distribution" checkmark on the 1099 R, but I know the refund would not be correct. However if I check "Taxable amount not determined" then I'm afraid it may trigger an audit because it does not match what is on my 1099 R. Who should I contact first, "old" provider or TurboTax??

Re: 1099 R box 2b Incorrect?

BillM223 — Thu, 30 Jan 2025 21:11:20 GMT

So have you gotten two 1099-R forms? Or are you saying that the old and new providers somehow coordinated in sending you one form?

If you got two forms, the one with the total distribution needs to be corrected. The instructions for the 1099-R (page 12) state

"Box 2b. Total Distribution Enter an “X” in this box only if the payment shown in box 1 is a total distribution. A total distribution is one or more distributions within 1 tax year in which the entire balance of the account is distributed."

That is, a distribution to the taxpayer. Changing administrators is more like a rollover. Most pension administrators don't even issue a 1099-R for a rollover, because there is no tax consequence to you.

So, your first impulse is right, contact the pension administrator who issued the 1099-R with the Total Distribution checked and ask them to rescind it. Otherwise the IRS will be looking for you to declare both 1099-R forms.

Re: 1099 R box 2b Incorrect?

WinpakBob — Thu, 30 Jan 2025 21:43:40 GMT

Bill,

Thanks for this quick reply. So, I did get two 1099 Rs from the previous provider and the new provider. The previous provider's 1099 R correctly shows distributions for 10 months. Their numbers are correct but I don't think they should have checked "Total distribution". The "new" provider also sent me a 1099 R for the two months they provided distributions. Their numbers seem to be correct also. So I do have to declare both because neither one shows the total distributions provided in 2024 completely. So, agreed this is effectively a rollover to the new provider (not me). So if I understand, I should contact the "old" provider and ask them to issue a corrected 1099 R with the "Taxable amount not determined". Thank you once again.

Re: 1099 R box 2b Incorrect?

MarilynG1 — Sat, 08 Feb 2025 01:33:11 GMT

Check the Code in Box 7 of the 1099-R from the 'old' provider. If there is a Code G, TurboTax knows it is a non-taxable rollover of the total funds in your account.

If so, this is just reporting, and there is no tax consequence to this entry, if, in the follow-up questions, you indicate that this amount was rolled over to another Retirement Plan (not a Roth). If not, then the amount on this 1099-R is most likely taxable.

You will need to indicate in the follow-up questions after entering the second 1099-R what you did with that distribution. If not rolled over, that amount is taxable also.

Most likely the amounts on both 1099-R's are taxable if no Code G is present. The 'taxable amount not determined' and 'total distribution' check boxes don't matter as much as the Code in Box 7. They are often checked incorrectly, especially if the total amounts of the two added together equal your pension distributions for 2024.

Here's more info on Form 1099-R you may find helpful.

@WinpakBob