What To Enter For Basis in PA State for 1099-R

[User1001]

My previous employer made a small contribution to my 401k before I left the company, then took it back since I wasn't vested. I have a 1099-R for this contribution and on the 1099-R Box 7 it has a 1B. Box 9b for Total Employer Contributions is blank. After filling in PA State Tax information in Turbo Tax, I get a 'Check This Entry' message that says:
Gross Compensation Worksheet: Basis in retirement plan PA is marked as rollover; however, Federal is marked 1 (not a rollover), enter cost or recovery basis or enter 0.

On the federal form I entered a 1 and a B, but the state form only shows the first code of 1.  The Gross Distribution on the worksheet has a 0. I need to enter a value for the Basis. Can I enter 0 in that field?
I don't know if it's important to mention, but I did do a rollover of funds that I contributed from the previous employer and the Gross Distribution field for that entry has the correct amount that I rolled over in it.

[ErnieS0]

Did you roll over the money? Your retirement plan provider will usually indicate a rollover with a Form 1099-R Box 7 code G or H if you made a direct rollover.

If you rolled over the money yourself after receiving it, the State Type Code will be Rollover on the screen “What kind of retirement income do you have from Pennsylvania?” 

If you did not roll over the money, you may have to change the state type code on the Pennsylvania screen from Rollover to something else.

Additionally, PA doesn’t give you a deduction for 401(k) contributions. If you were a PA resident you may have a cost basis equal to the Form 1099-R Box 1 amount if this contribution was previously taxed.

If are moved into PA, it's likely you would have $0 basis because this money was never taxed.

We need more info to fully answer your question.

[User1001]

I wanted to rollover just the funds I contributed, but I'm assuming the funds I contributed and the funds the employer contributed but took back from not being vested were rolled over also. I was given a 1099-R for each. The one with no money has $0.00 in box 1, an amount in box 5 and distribution code 1B in box 7.  The other 1099-R for the same employer has funds listed in box 1 and 5 and has a distribution code of GB in box 7.

I didn't try to rollover the funds from the employer contributions, but the financial company was the same with both employers so I'm assuming they tried to rollover the funds I had plus the funds the employer contributed but took back because of not being vested. 

I was a PA resident the entire time.  In addition to these two 1099-R forms I have another 1099-R from rolling funds from a different employer into my current 401k.  So I have:
1.)  1099-R  with all pre-tax funds
2.)  1099-R with only Roth contributions

3.)  1099-R with $0.00 gross distribution with employee contributions not vested.

[LindaS5247]

A Form 1099-R is issued for distributions from an IRA, Roth IRA, or a retirement plan.

You stated your employer "took back" your employer contributions due to vesting.  So you were not fully vested in your employer contributions. Your employee (pre-tax) contributions to the plan will always be 100% vested.

You stated that you were issued a Form 1099-R for a rollover of both of these amounts to a financial institution.  If the money was rolled over including the employer contributions, did your employer take the money back after it was rolled over?  Clarification  may be needed.

1B in Box 7 indicates an early distribution subject to the 10% penalty and designated Roth monies.  If you received a distribution of the monies and are under age 59 1/2 a 10% penalty would apply, but not if it was timely and properly rolled over to an IRA or another qualified retirement plan.  This appears to be Roth monies in a 401(K) plan, which are subject to the 10% early distribution penalty.

You should check with your former employer or financial institution who issued this Form 1099-R to make sure it is accurate. 

Your cost basis in retirement income (pension, IRA, 401K, etc,) is the sum of the nondeductible contributions to your  "retirement plan/account" minus any withdrawals or distributions of nondeductible contributions.  There are two types of contributions that one can make to a retirement plan, pretax contributions and after-tax contributions.

A pretax contribution is one made with money that is either deducted on your tax return (such as a Traditional IRA contribution) or is deducted from your gross pay through an employer (such as a 401(k) contribution). 

Note: An after-tax contribution is one that is made with money that has already flowed through your tax return and does not result in a tax deduction, such as a contribution to a Roth IRA or a nondeductible contribution to an IRA or 401K.

An after-tax contribution creates "Basis" in your retirement account. Because that money has already been taxed, when you withdraw it the amount is not taxed again.  Therefore, it appears these are Roth 401(K) monies.  

Clarification would be needed to sufficiently answer this question.  Your basis in the first 1099-R distribution that you described is determined per the above, however it is not clear whether these monies were actually rolled over or whether there were employee contributions distributed or rolled over. In your case, according to the facts stated above in your question, your basis may be $0.  Are there numbers in Box 2a and b of this Form 1099-R?

Multiple 1099-R's were entered into TurboTax. They must be entered separately as they are shown on the Form 1099-R.

Click here for information on the taxability of amounts on Form 1099-R.

Click here for additional information on entering your Form 1099-R in TurboTax.

Click here to contact Turbo Tax for assistance.