1099-R Rollover to a current 401K - income?

[chapinreyes]

Hello,

I performed a rollover last year.  Turbo tax is showing me this rollover counts as income to me.  I spoke with the plan administrator and they confirmed it went to the 401k (pretax), but somehow turbo tax counts it as income.  Why is Turbo tax doing this?  It also thinks it was as withdrawal.  Help!

Here are a couple of screenshots to show you that Turbo tax is considering this as income?  How come?  Since this money went to my 401K?   Is there something i am missing?

[RaifH]

If the only distribution from your 401(k) was rolling it over into another 401(k), then that should not be taxable. Make sure you entered it in this manner:

1. Go to Federal > Wages & Income > Retirement Plans & Social Security > IRA, 401(k), Pension Plan Withdrawals (1099-R) and click Start / Revisit.
2. Continue through the screens to import or enter your 1099-R form.
3. When asked Tell us if you moved the money through a rollover or conversion select I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days) and Continue.
4. On the next screen, Did you roll over all of this (Box 1) to another retirement account? answer Yes, I rolled over to an IRA or other retirement account (or returned it to the same account) and Continue. 

You may not receive all these questions depending on the distribution code on Form 1099-R, but as long as you said it was rolled over into another traditional 401(k), the distribution is not taxable. Make sure you answer No to any questions asking if you rolled it over into a Roth 401(k) or Roth IRA. 

You can preview your 1040 to make sure it is not being taxed:

1. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
2. With the Tax Tools menu open, you can then: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu.
3. Scroll down until you see Form 1040 Line 5. Line 5a should have the entire distribution amount. Underneath, it should say ROLLOVER, and line 5b should be blank.

[chapinreyes]

Hello RaifH!

Amazing, let me go through this and will update you soon!

[chapinreyes]

Hello RaifH,

I went through that section again, actually a few times and it seems that answering YES or NO does not make a difference because they both show as income, but it is not taxable.  See screenshots.  I am confused as to why Turbo Tax still thinks this is income though see as it increases total income.  But yes it does not seem to be taxing.  See the following:

** i answered all the boxes that correspond to the 1099-R

*** Here i tried answering both questions.  My plan administrator told me that it went to a 401K plan and NOT a roth IRA.  SO it seems the right answer is NO as you stated.  Correct?

HOwever, it does not matter answering YES or NO this  still does not change.

But turbo tax sees that zero is taxable which is good, but why does my total income is increased since this is a rollover?  Or is this just the way turbo tax sees it?

[DanaB27]

Yes, please be aware that the whole distribution will show as income in TurboTax on the summary screen which shows gross income, not taxable income. It seems you reported it correctly since you get the statement that zero is taxable. You can also verify the entry by looking at Form 1040 line 5b (taxable amount), it should show $0 and state ROLLOVER next to it.

Yes, you will answer "No" to "Did you move this money from a 401(k) to a Roth 401(k)?" question.

@chapinreyes

[chapinreyes]

Hello DanaB27,

Thank you for your response!  You answer my question and thank you!  However, how is it that TurboTax considers it income?  But in the 1040 form it does show as a rollover and 5b has 0.

[DanaB27]

You can ignore the summary screen. It just shows all the distributions from box 1 of Form 1099-R. The important part is that your Form 1040 shows the correct information. This is what gets sent to the IRS.

@chapinreyes

[chapinreyes]

Ok great.  I am going to redo the form, so I deleted the form and here is where I am again!

To be clear, i did not get any retirement income just a rollover.  

So here is the tricky part - i did not get any retirement income so I would have to answer NO.  But If I do that I cannot enter the 1099R, so I would have to enter YES, correct?  

[DanaB27]

Yes, you answer yes to “Did you receive any retirement income for 2021, since you received a Form 1099-R for the rollover and you need to enter it.

@chapinreyes