Two 1099-Rs, G and H, for same Roth 401K to Roth IRA rollover activity

[Shaddowfax]

My new employer's plan supports after-tax contributions, which are auto-coverted by Vanguard into a Roth 401K. Twice last year I rolled over the Roth 401k to my Roth IRA as a mega backdoor Roth. The first, in July, was 15,707.76, and the second, in December was 14,380.80, totaling 30,088.56.

Vanguard issued me two 1099-Rs for 2021. The differences are:

First 1099-R:

Gross distribution: $ 30,088.56 <-- The amount I actually rolled over

Taxable Amount: $0

Distribution code: H

Account number: xxxxxxxxxxxx...98

Second 1099-R: 

Gross distribution: $28,750.00 <--- No idea where this number came from

Taxable amount: $0.07 <-- Possibly earned while Vanguard was performing the auto-conversion?

Distribution code: G <-- Both G and H say they're direct rollovers to qualified plans...?

Account number: xxxxxxxxxxxx...97 <--- One digit off from the first account number

When I enter both 1099-R's, my tax owed doesn't change (yay), but the Summary says I received $58,839 in total pension distributions, which obviously isn't correct. Neither form says it's corrected or anything, so why the two forms with the 2 different codes? The 30,088.56 is the correct amount that was rolled over from the Roth 401K to the Roth IRA. 

[DaveF1006]

No, you shouldn't be audited based on the distribution codes. If you report the 1099R forms just way it is recorded on the hard copy, you won't get audited. In case if you are examined, you have the hard copies to prove to the IRS that you recorded everything correctly AS LONG as you report everything correctly that is listed on the forms.

[Shaddowfax · Accepted solution]

Replying to my own post because I spent a bit of time calling the IRS and Vanguard to find the answer.

Not everyone doing a mega backdoor Roth will run into this (because not all plans have the auto-conversion option), but some will, so FYI: One of the 1099-Rs, Distribution code G, was for the auto-conversions Vanguard did from the after-tax funds into the Roth 401K. The second 1099-R, Distribution code H, was for the rollover from the Roth 401K into the Roth IRA. The differing amount was, as suspected, the difference between initial contributions and growth before rollover.

I'll report both and the software will SAY I took $58,839 in total pension distributions, but ignore the wording - this is better thought of as total pensions activity, since the 28k was converted to the Roth 401K and then the 30K was rolled over into the IRA. Same money rolling around, but different events. If I hadn't done the rollover, I would have only gotten the G 1099-R (and still would have reported it).

None of it is taxable, the IRS isn't losing sleep over the $0.07 that accrued while Vanguard was performing the auto-conversions. But note, if your plan doesn't support Roth 401K auto-conversions like mine, your taxable growth will (hopefully) be much more than $0.07 and the IRS will most definitely care, so report that ish. 

[seninus]

Hey i am having the same issue.  if I add both G and H,  Turbotax reports over 100k rollover.    do you end up only reporting for 1099-R with code H only??  and don't import the 1099-r with code G? 

Thanks

[DanaB27]

No, you will enter both Form 1099-R as shown on the forms to report the rollover. Rollovers are not taxable. Please make sure you answer the follow-up questions carefully.

1. Click "Wages & Income" (under Federal) on the left
2. Scroll down and click "Show more" next to "Retirement Plans and Social Security"
3. Scroll down and click "Start" next to "IRA, 401(k), Pension Plan (1099-R)" 

[Edited 3/30/2023 |9:25 am PST]

@seninus

[jwv66]

I am in a similar situation.  I rolled over a 401k Roth to another 401k Roth.  Received two 1099-R with one having a distribution code of GB and the other G.  I know both are considered non-taxable but when I look at my income summary, it shows the pension non-taxable amounts but it is included in my total income, which is not correct.  Why is that happening?  

[dmertz · Accepted solution]

The code GB Form 1099-R reports the rollover from the old Roth 401(k) to the new Roth 401(k).  The code G Form 1099-R reports the rollover of the old traditional 401(k) to the new traditional 401(k).

Both of these are "income" in the sense that they must be reported on your tax return even though these rollovers are nontaxable, so including these in Total Income in the income summary is correct.  The total of these will be included on Form 1040 line 5a but will be excluded from line 5b.  The "ROLLOVER" notation will appear next to the line.