topic IRA Indirect rollover in Retirement tax questions

IRA Indirect rollover

janwithTT — Fri, 28 Mar 2025 10:41:45 GMT

I’m having a problem filling out Turbo Tax for an indirect rollover. I rolled over a 401K to an IRA annuity. Fidelity, administrator of my 401K, wouldn't do a direct rollover for my IRA annuity. Fidelity sent me the check, making this an indirect rollover and necessitating the creation of a 1099-R. Turbo Tax is adding the total amount of the rollover to my income. How and where do I get Turbo Tax to subtract the amount? According to the IRS publications I’ve read and tried to understand, if it was a direct rollover, Fidelity wouldn’t have sent a 1099-R.

P.S. I'm 72 and 10 years retired

Re: IRA Indirect rollover

AnnetteB6 — Fri, 28 Mar 2025 11:11:43 GMT

Try going back to where you entered the Form 1099-R. One of the follow-up questions should ask What Did You Do With The Money? and the answer choices are 'moved the money to another retirement account' or 'did something else'. Choose the 'moved the money to another retirement account' option and then select that it was 'rolled over'.

That should take care of removing it from your taxable income.

Re: IRA Indirect rollover

janwithTT — Mon, 31 Mar 2025 07:09:31 GMT

Hi AnnetteB6,

I think my IRA rollover was actually a direct rollover. Here's more info.

1099-R form for my 401k rollover is filled out like the following:

1. has the full amount of 401K

2a. 0.00

2b. blank

3. 0.00

4. 0.00

5. 0.00

6. 0.00

7. G

IRA/SEP/Simple blank

Fidelity, the administrator for my previous employer's 401K, sent the check to me. The check read:

Pay to the order of: Minn Life TR IRA. Within 2 weeks, I sent the check, Minn Life received the check and my new IRA was opened. I received a paper from the Minn Life administrator stating Transaction Activity, Date, Rollover, plan type Individual Retirement Annuity, the amount of the check from Fidelity.

When I entered the 1099-R form info into TurboTax Premier, I do not get a question asking what I did with the money. I thought the "G" means a direct rollover from one IRA to another. The rollover has increased my income to 3 times my usual yearly income. I wonder if that increase is responsible for the government now wanting me to make quarterly estimated payments.

401K to IRA rollover - follow up thoughts

janwithTT — Mon, 31 Mar 2025 07:47:49 GMT

I left my former employer in 1994, but left my 401K funds there. Fidelity administers it now. Does Fidelity send information to the IRS about the amount in the 401K? I assume I did not have to inform the IRS. However now that the money is an IRA I will be sending in the year end IRA amount to IRS in my tax forms. Is this correct? I still am of the opinion that my rollover should not be added to my income, even though it's not adding to my tax amount. However I do wonder if that jump in "supposed income" is making IRS ask me for estimated quarterly payments.

Re: IRA Indirect rollover

janwithTT — Mon, 31 Mar 2025 07:56:26 GMT

AnnetteB6 - You suggested: Try going back to where you entered the Form 1099-R. One of the follow-up questions should ask What Did You Do With The Money? and the answer choices are 'moved the money to another retirement account' or 'did something else'. Choose the 'moved the money to another retirement account' option and then select that it was 'rolled over'.

I only get the question What Did You Do With The Money? when I am entering the 1099-R forms for my pension plans. In those cases Box 7. Has a "7" in it, not a "G" like with my rollover

Re: IRA Indirect rollover

DanaB27 — Mon, 31 Mar 2025 11:01:13 GMT

To ensure to rollover is correctly entered into TurboTax, TurboTax should ask you the following questions after you entered the 1099-R with code G :

On the "Did you move this money from a 401(k) to a Roth 401(k)?" screen answer "No"
On the "Did you move the money to a Roth IRA?" screen answer "No"

Please be aware that the whole distribution will show as income in TurboTax on the summary screen which shows gross income, not taxable income. To verify that the entry is correct please look at form 1040 line 5b (taxable amount), it should show $0 and state ROLLOVER next to it.

To preview Form 1040:

Click on "Tax Tools" in the left menu
Click "Tools"
Click "View Tax Summary" in the Tool Center window
Click on "Preview my 1040" on the left