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
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.
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.
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.
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.
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.