Question about 401k to IRA Rollover

[melissaforpeace315]

I requested a rollover check (so that I could rollover my 401k to an IRA) from Fidelity in late Dec and the rollover check was officially processed via Fidelity on Dec 29, 2023. As expected, the check took several business days to arrive via mail and when it did, I went to my IRA custodian to deposit this rollover check. My new IRA custodian informed me that they processed this rollover check for the date of today (Jan 11, 2024) and that it's processed as a 2024 rollover.  From a tax perspective/IRS forms-perspective, is there any issue with the fact that my 1099 (that I'm expecting to receive in a month or so) that I'm going to receive for the 2023 tax year will have a section that indicates that there is a rollover that has been processed, but that I won't have any 'tax document' to show the IRS that I made the rollover to my IRA custodian (since my new IRA custodian processed the rollover until 2024) by the time I file my taxes by April 15, 2024? I'm assuming that the IRS would be expecting a form that would show or indicate that I subsequently rolled over my 401k check from Fidelity into an IRA, but I don't think the 5498 from my IRA custodian will arrive by the time I file my 2023 taxes.

[Opus 17]

You're fine.  This is an indirect rollover (because you got a check, it was not done bank to bank) and you have 60 days to complete it.  The fact that you straddled the New Year won't confuse the IRS.  

[melissaforpeace315]

@Opus 17  Thank you for your reply!!  So even though when I file my 2023 taxes, I won't have any form that indicates that I successfully rolled over my 401k check into an IRA, they won't question it?  Just curious- then how would the IRS make sure that the person didn't 'cash out' the check or just basically write the check to their taxable brokerage and thus just use it instead of rolling over into a retirement account?

[Opus 17]

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@melissaforpeace315 wrote:

@Opus 17  Thank you for your reply!!  So even though when I file my 2023 taxes, I won't have any form that indicates that I successfully rolled over my 401k check into an IRA, they won't question it?  Just curious- then how would the IRS make sure that the person didn't 'cash out' the check or just basically write the check to their taxable brokerage and thus just use it instead of rolling over into a retirement account?

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Taxes are mostly on the honor system, and it's not really clear how much matching the IRS really does.  (Remember the IRS computers are still based on 1960s technology, using a programming language that almost no one uses.  They aren't as all-seeing and all-knowing as they want you to think.)

You will have a 2023 1099-R showing a withdrawal, and the rollover contribution won't be reported until the new broker issues their 2024 form 5498 in May 2025.  (Because I'm pretty sure a rollover can't be retroactive like some contributions can be.).   But even under the best of conditions, the IRS won't get around to trying to match the 1099-R to a 5498 for 9-12 months after you file.  If they do send you a letter, reply with copies of your statements showing the completed rollover and explain that it will be on the next 5498.   

[melissaforpeace315]

@Opus 17 Thank you so much for the info! Would you suggest that I provide anything to the IRS in addition to filing my taxes next month to 'explain' that I indeed rolled over my 401k check to my IRA custodian?  Like should I provide a January statement?  Or should I just file my taxes like usual...

[Opus 17]

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@melissaforpeace315 wrote:

@Opus 17 Thank you so much for the info! Would you suggest that I provide anything to the IRS in addition to filing my taxes next month to 'explain' that I indeed rolled over my 401k check to my IRA custodian?  Like should I provide a January statement?  Or should I just file my taxes like usual...

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Just file.  You can't include attachments in turbotax, and you don;t want to mail your return for many other goo reasons including accuracy and security, and even if you did send an explanation statement, there's a good chance the IRS would lose it because they aren't expecting it.

Just file.  Be prepared to answer any questions later, but they probably won't come up.