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Level 1
posted Apr 8, 2018 10:01:08 PM

Received 2 1099-R for a traditional ira rollover to roth ira

Received 2 1099-R for a traditional ira rollover to roth ira.

The first 1099-R on line 7 - distribution code 2 with the gross distribution for example $100K on lines 1 and 2a. 

The second1099-R has distribution code 1 with the gross distribution for $10K on lines 1, 2a and 12 as State Tax withheld $.

 

When I enter these 2 forms on TurboTax Premier, it is showing as $110k on line 15a on Form 1040 as IRA distributions. I am not sure why am I getting taxed twice on the $10K and also showing up as an early withdrawal with 10% penalty on line 59 for $1K.

 

They have distributed my Roth IRA $90K and I didn't cash out the $10K to pay for state taxes. Thanks.

0 2 1889
1 Best answer
Expert Alumni
Apr 9, 2018 2:48:50 PM

When you take money out of a traditional IRA you pay the income tax on it. You'll also pay an extra 10% tax if the distribution was early unless an exception applies.  The box 7 codes on your 1099-R forms indicate that both of these distributions were early and from non-Roth accounts.

  • Code 2 indicates an early distribution from a non-Roth account for which a known exception to the early distribution penalty applies
  • Code 1 indicates an early distribution from a non-Roth account for which no known exception to the early distribution penalty applies

Since there wasn't a known exception for the $10,000 distribution (box 7 had code 2), you must pay the additional 10% tax unless you show that an exception applies. TurboTax asks questions during the interview to see if you qualify for an exception to this additional tax. These exceptions are discussed here.

 

You might want to doublecheck the 1099-R and see if the $10,000 was actually in box 14, state distribution, and not box 12, state tax withheld.

2 Replies
Expert Alumni
Apr 9, 2018 2:48:50 PM

When you take money out of a traditional IRA you pay the income tax on it. You'll also pay an extra 10% tax if the distribution was early unless an exception applies.  The box 7 codes on your 1099-R forms indicate that both of these distributions were early and from non-Roth accounts.

  • Code 2 indicates an early distribution from a non-Roth account for which a known exception to the early distribution penalty applies
  • Code 1 indicates an early distribution from a non-Roth account for which no known exception to the early distribution penalty applies

Since there wasn't a known exception for the $10,000 distribution (box 7 had code 2), you must pay the additional 10% tax unless you show that an exception applies. TurboTax asks questions during the interview to see if you qualify for an exception to this additional tax. These exceptions are discussed here.

 

You might want to doublecheck the 1099-R and see if the $10,000 was actually in box 14, state distribution, and not box 12, state tax withheld.

Level 1
Apr 10, 2018 10:08:29 PM

Thanks this is very helpful. The 1099-R forms are correct. I didn't know that I have to pay the early distribution penalty for withholding for taxes. I didn't meet the exceptions.