The IRS essentially requires that all Forms 1099-R be accounted for on the individual's tax return. Although it should not be possible, direct rollovers (codes B and G together for a direct rollover from a Roth 401(k)) sometimes fail because they are inappropriately diverted to non-retirement accounts, so the reporting the nontaxable rollover on the tax return is your attestation to the fact that the rollover was actually completed. Of course a rollover to an IRA will also be reported by the IRA custodian on Form 5498, but that does not release you from the obligation to have the rollover properly shown on your tax return. The same codes can indicate a rollover to a Roth account in another qualified retirement plan rather than to a Roth IRA, and under those circumstances there would be no Form 5498 to indicate that the rollover had been completed. Also rollovers done late in the year might not be deposited into the receiving account until early the following year, in which case the Form 5498 for the deposit into the IRA would not be generated until more than a year after the year of the tax return on which the distribution is required to be reported.
To summarize, you are required to report the nontaxable rollover on your tax return to give the IRS the necessary confidence that the rollover was actually completed.
Yes, otherwise the IRS may send you a bill for the tax you would owe if you kept the money. The IRS won't necessarily know it was a rollover to a new qualified plan, unless you tell them.
Yes, you need to enter this 1099-R on your tax return and follow the TurboTax interview. In the interview, answer that you rolled over the money to a Roth IRA account. Roll overs are not taxable.
Thanks for the feedback. Still don't know the why and wherefore but I will go along. I guess my confusion is that this was a Roth from a 401K (actually TSP but close enough) to a Roth IRA. Given that there is no tax liability I don't understand the need to input the data. The 1099R even showed zero tax due. All this did is inflate my income for 2020. I didn't actually receive the money but my total incomes shows the the gross amount. As I said I will accept the requirement.
It shouldn't increase your taxable income, it may increase your overall "income" on the summary screen but that doesn't make it taxable. An after-tax retirement plan is not actually a "Roth" IRA although they are similar in purpose. If this was a direct transfer from plan-to-plan, it should have a code G (or maybe H) in box 7 which would automatically make it non-taxable, but you still enter it. If you got a check, it would be code J, and then you have to tell the IRS that it was rolled over to a new qualifying plan within 60 days.
The IRS essentially requires that all Forms 1099-R be accounted for on the individual's tax return. Although it should not be possible, direct rollovers (codes B and G together for a direct rollover from a Roth 401(k)) sometimes fail because they are inappropriately diverted to non-retirement accounts, so the reporting the nontaxable rollover on the tax return is your attestation to the fact that the rollover was actually completed. Of course a rollover to an IRA will also be reported by the IRA custodian on Form 5498, but that does not release you from the obligation to have the rollover properly shown on your tax return. The same codes can indicate a rollover to a Roth account in another qualified retirement plan rather than to a Roth IRA, and under those circumstances there would be no Form 5498 to indicate that the rollover had been completed. Also rollovers done late in the year might not be deposited into the receiving account until early the following year, in which case the Form 5498 for the deposit into the IRA would not be generated until more than a year after the year of the tax return on which the distribution is required to be reported.
To summarize, you are required to report the nontaxable rollover on your tax return to give the IRS the necessary confidence that the rollover was actually completed.
Thanks to all who took the time to respond. I appreciate your help.
how do I record a rollover contribution due to the cares act
@Neal Harte wrote:
how do I record a rollover contribution due to the cares act
Generally, you just follow the interview.
What exactly did you do, that you think qualifies as a "CARES" rollover? Rollovers are always allowed to certain rules, CARES withdrawals have some special rules, but I don't know what you did.