two quick questions about 401K

[Helen123]

Hi, one quick question.

If I firstly plan to roll over the fund to the new employer 401k (initialise the process), but I didnt request the old employer pension to roll it out. I assume it means the process didnt officially start yet and there will not be any taxable event or 1099 R, right? @Opus 17 @Mike9241 @dmertz 

Thanks

[Mike9241]

if you do a direct rollover of 100% of your account there is nothing to tax. it's when employees liquidate their accounts and there is withholding or they don't complete the rollover in 60 days- when tax issues start. 

[Opus 17]

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@Helen123 wrote:

Hi, one quick question.

If I firstly plan to roll over the fund to the new employer 401k (initialise the process), but I didnt request the old employer pension to roll it out. I assume it means the process didnt officially start yet and there will not be any taxable event or 1099 R, right? @Opus 17 @Mike9241 @dmertz 

Thanks

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You've posted a new question to an old thread, so we don't have any more information than your few words and we don't know if your situation is similar to other people in the discussion.

If you have a pre-tax 401k at an old employer, and you want to roll it over to the pre-tax 401k at a new employer, that is not a taxable event, so it doesn't matter what date the transaction settles.   If you have after-tax funds in the 401k (this is uncommon but it does happen) then things are a little more complicated and we need more details to give you the right instructions.  

[Helen123]

Hi, I plan to do the pre-tax 401 K direct roll over. I started transferring money in from the new employer 401k, but I have not started transferring money out from the old 401k. I assume I have not started the roll over yet and will not receive 1099R and no tax event starts. Is it correct? @Opus 17 

Thanks,

Helen

[Opus 17]

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@Helen123 wrote:

Hi, I plan to do the pre-tax 401 K direct roll over. I started transferring money in from the new employer 401k, but I have not started transferring money out from the old 401k. I assume I have not started the roll over yet and will not receive 1099R and no tax event starts. Is it correct? @Opus 17 

Thanks,

Helen

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Your question is still a bit confused, I'm not sure the terms you are using.  If you are contributing funds to a 401k at your new employer via payroll deduction, that is never reported on a 1099, only on your W-2.  A 1099 is issued for a withdrawal.  If the withdrawal from the old 401k was not made in 2024, there will be no 1099-R for 2024.  (And in fact, there are some cases where a 1099-R is not even issued.  A direct rollover from one 401k to another may be one of those cases, as long as the money is directly transferred and doesn't come into your hands temporarily.  Other experts know these exceptions better than I do.)

[dmertz]

A direct rollover from one 401(k) to another involves  is a distribution from the old 401(k) paid directly to the new 401(k) account.  The process generally should begin with the new plan as you have done, allowing the new plan to specify to the old plan the actual account to which the funds are to be paid.  The old plan then makes a distribution payable to that account, either by funds transfer or by issuing a check made payable to that account which can be sent directly to the new plan or can be sent to you for delivery to the new plan.  In any event, with a direct rollover the funds are not made payable to you, but are instead paid to the new plan for your benefit.  The transaction is reported by the old plan on a Form 1099-R for the year in which the distribution from the old plan occurs and is reportable on your tax return for that year.  On your tax return the direct rollover to the new 401(k) will be shown as nontaxable.

[Helen123]

many thanks. @dmertz  1. So, this is 100% non-taxable event, right?

2. The old plan can only deliver the check to me to deliver to the new plan rather than directly send to the new plan. Since, I have not requested the old plan to send the check to me yet. So, I will not receive the 1099 R and nothing to report, right?

Thanks.

Helen

[dmertz]

This constitutes a distribution from the old 401(k), so the old 401(k) plan is required to issue a Form 1099-R.  A Form 1099-R for a direct rollover to the new plan will have code G in box 7 and will have $0 in box 2a as the taxable amount.  Unlike with IRAs, a funds in a 401(k) can only be moved by distribution and rollover, not by nonreportable trustee-to-trustee transfer.

You should make sure that the check is made payable to the new plan for your benefit and should indicate the 401(k) account that is to receive this rollover.  Assuming it's from the traditional account in the old plan, it should indicate that your traditional account in the new 401(k) plan is to receive this rollover.  With the check made out to your new 401(k) for your benefit, you'll simply forward the check to the new plan.  You are simply involved in delivering the check, you are not involved in the financial transaction itself because the funds are not made payable to you.

[Helen123]

many thanks. That is super helpful. Since I didnt start requesting the check from old 401k, I will not receive 1099 R this year and nothing needs to report, right?

H

[dmertz]

Correct.  With the distribution from the old 401(k) occurring in 2025, it will be reportable on your 2025 tax return.