How to replace 1042-S Form with a 1099-R Form for Tax filing in a "Resident Alien" status

[RD777]

Hi, I came to US on a F-1 visa in 2017 and I am still under the same status (F-1), and I have been filing my 1040-NR with Sprintax every year. I worked for an employer starting Jan 2022 till Aug 2022 and opted for the 401K during that time. When I left this employer in Aug 2022, I withdrew the entire 401K and I believe they deducted 30% out of that total amount and paid me the balance money.  

When I enrolled for the 401K plan, I informed them that I am Non Resident Alien (as I did Not knew last year that I would acquire a "Resident Alien" status for filing my 2022 tax returns in 2023, I only came to know about this recently when I started looking to filing my Income tax returns for 2022). So when I called the 401K company today to ask for my 1099-R, the said that  I will be getting my 1042-S via mail by 15th March 2023, as my status in their system is that of a Non-resident Alien which I told them about during enrollment. I know that I will be using Turbo Tax this year for my tax returns but I am confused over this issue now, and I need your help before I go ahead and file my tax returns.

[DaveF1006]

To clarify, what did you do with the 401K that you cashed out? Did you roll it over into another qualified retirement plan or did you keep the money.? Also are you less than 59 1/2 year old?  Please advise and we will provide you with a complete answer.

[RD777]

Hello Dave, Yes I cashed out the 401K and they deducted around 30% before paying me the balance. I am 48 years old. 

I would further like to mention that I called the 401K company yesterday and I spoke with their Manager on duty. Despite my multiple requests to provide me the 1099-R instead of the 1042-S (which they will be sending me by March 15th), she said it is Not possible for them to change it, as it was I who selected my status as a Non Resident Alien last year when I enrolled for the 401K,  and that cannot be changed now as it is "irrevocable" so now they will be sending me the 1042-S form only.  I told her that I only realized this recently when I started looking to pay my taxes (for 2022) that my Residential status FOR TAX PURPOSES changed to that of Resident Alien starting January 2022 (because of substantial presence test), and last year when I enrolled for the 401K, I did NOT have any clue about this and so I stated my status as a Non Resident Alien.  But she said that she will Not be able to provide any help on this, and then I should approach IRS to seek further advice.  

[DaveF1006]

What complicates this fact is that you took an early withdrawal from your 401 K and now because you are less than 59 1/2 years old, you need to pay the tax on an early withdrawal in addition to the regular income tax.  in your situation, there are no exceptions to this this extra tax since you did not roll the money into another retirement plan 

My suggestion is to call the company and get their EIN number and prepare a substitute 1099R otherwise known as a 4852.  Here is how to report.

1.  Log into Turbo Tax
2. Go to federal>wages and income>Retirement Plans and Social Security>IRA, 401(k), Pension Plan Withdrawals (1099-R)
3. When it asks for financial institution, select change how i enter my form
4. Next screen indicate you will type it in yourself.
5. Navigate through the screens until it asks who gave you the 1099R, here indicate it was from a financial institution.
6. Now give the complete information including the address of the 401k provider. You will need an EIN to complete all this information. The EIN goes under the payer's TIN information
7. Once you are in the form, report your withdrawal both in Boxes 1 & 2A.  Also make sure that you report the amount of federal income Tax withheld in Box 4. A
8. In box 7, select distribution code 7.
9. Answer the next few questions after that Do not check the box indicating this is an IRA.
10. When you reach a screen that asks if what kind of retirement plan is this, mention it is a qualified plan.
11. Next screen will ask Do Any of these Situations Apply to you? Here you will check need to file a substitute 1099-R
12. After this there will be some screens asking how you determine the substitute amounts you entered in your 1099R. just mention you received these in a statement and a 1042S.
13. Then it will ask how you tried to receive a 1099R. Mention company refused to issue one because of your non-resident status in pervious tax years.
14. Next will ask if you rolled over the money. Here you will check that you did not.
15. Here you will finish out the rest of the section.

Since you are reporting the taxes withheld in your substitute 1099R, you do not need to report the 1042S. Also, if the company refuses to give you the information regarding EIN(Payers TIN) or address, you will need to fill out the 1099R information as completely as you can.  At tis point, you will need to print the return and mail it as it will not electronically file without the EIN or Payer's TIN. Just explain to your 401 K administrator that you spoke to a Tax professional and you need this information to electronically file your taxes.

@{Edited 02/07/2023} 7:17 AM PST} @RD777