Ineligible Rollover of 401K plan to IRA

[dtrang]

Hello,

Please help.

I retired from company on 5/31/2022 and turn 73 at the end of 2022.

On 3/9/2023 I rollover entire balance from my company 401k plan to my IRA which included the RMD for year 2022 and year 2023. Later found out that the 401k RMD cannot be validly rolled over to an IRA account, On 3/27/2023 I withdrawn the RMD for year 2022 and 2023 as “return of excess contribution” from the IRA account.  How can I file my tax return on 2023.

I received 1099-R from my 401k company reported entire rolled over amount included the RMD for year 2022 and 2023 in box 1 and code G in box 7. And received another 1099-R from my IRA custodian box 1 the amount of the RMD for 2022 and 2023 and the earning and code 8 in box 7.

Thank you,

[dmertz]

The plan was required to prohibit you from doing a direct rollover until the RMDs was satisfied, but they did not do that.  Instead they permitted the entire amount to be directly rolled over and reported it that way.  Ideally you would ask them to correct the code G Form 1099-R to report as rolled over only the amount that was permitted to be rolled over and issue a separate code-7 From 1099-R reporting the portion that was RMD.  If they refuse, you'll need to do that yourself by entering these into TurboTax this way as substitute Forms 1099-R in place of the code-G Form 1099-R that they provided.  You'll enter the code-8 From 1099-into 2023 TurboTax as is.

[dtrang]

Thanks dmertz,

I am a little lost. They did provide the 1099-R included the illegal rollover RMD. You meant I have to split into two substitute 1099-R form, one for legal rollover with code G, and the other one for the illegal rollover RMD with code 7.

[dmertz]

Yes, the amount needs to be split between two Forms 1099-R as you describe.

[dtrang]

Thanks,

So one for legal rollover with code G in box 7, and the other one for the illegal rollover RMD with code 7 in box 7 correct!.