1099-R Form Distribution Code Box 7 - G Question

[PK02]

Hi,

I rolled over  25K  amount  in 2023  from   my  403(b)  to Roth 403(b) Plan within  the same employer plan.

Fidelity sent me a 1099-R form with Distribution Code Box 7 -  with Code G ( only one code - no second code).

When I entered this information in Turbo Tax 2023, roll over tax is shown as non-taxable amount.

Is this code  G - Given in Box 7 Correct or should it be a different code like B ( rollover to Roth plan ?).

How Should I file my tax to show that  this is a Taxable income ..?

or 

Should I contact Fidelity to send a Corrected 1099-R with a different Distribution code other than G ..?

Please advise.

Thank you

Pk

[JulieS · Accepted solution]

Yes, rolling over a 403(b)  to a Roth 403(b) plan is a taxable event and code 7 (normal distribution) is the correct code for box 7. 

The reason this is taxable is that the original 403(b) is a tax-deferred account and the Roth 403(b) isn't a tax-tax-deferred account. 

As you contributed to the original 403(b) account, the amount was subtracted from your taxable income reported for that year on your W-2 form. This is what's meant by tax-deferred account. You pay taxes on this money when it's distributed. 

By rolling it over to a Roth account, you have distributed it. Roth accounts are funded with previously taxed income. 

Rolling it over to a Roth account means you pay taxes on the distribution now, but there's no early withdrawal penalty. When you withdraw your Roth funds in retirement, they are usually tax-free.

If you didn't understand this amount would be taxable now, you should contact your plan administrator to discuss your options. 

[SteamTrain · Accepted solution]

@PK02 

I've done that before, and it worked out OK...i.e. $$ were properly assessed a tax by the software.

And Yes, a Fidelity, with just a single code G.

______________________

So Questions that might apply in order to enter it properly in the software.

1) First, is box 2a the same $$ amount as box 1?

2)  If not #1, then is there a $$ amount in box 5 equivalent to the amount box 2a was lowered from the box 1 value?

3)  Finally, did you EDIT that 1099-R and go thru all the follow-up questions after the main page?

There is one page that asks...if the $$ were rolled into a ROTH 401k or ROTH 403b.  You need to answer YES to that question...that is the only way you indicate it went into a ROTH, and the amount in box 2a gets taxed appropriately.

[PK02]

Thank you.  Box 1 amount  is same as 2a.

I also answered "YES"    -   $$ into a ROTH 401k or ROTH 403b. to that question. Tax software added $$ as taxable amount. 

Want to make sure - Taxes are filed properly with Code "G" in Box 7.

[SteamTrain]

Yep, sounds right.