Rollover IRA

1) Did you or your wife contribute to a traditional IRA or Roth IRA?

a rollover is not a contribution so "no"

2) Should i report Rollover IRA  account to IRS during tax returns?

it would seem the rollover occurred in 2021 so there is no reporting on this for 2022. if it was in 2022 there would have been a 2022 1099-R

I had a 401k from old employer under  brokerage A, and when i moved to new employer , they have brokerage B.
On 1/27/2022 i requested to  move funds  to new brokerage B into rollover IRA (My current employers 401k plan is in this brokerage B). Should i report this  to IRS in current tax return filing, i don't see this form in my brokerage online tax forms.

If it would have to be done in last year, which i didn't do . What are my options. Please let me know.

Today called previous retirement brokerage A i received 1099R form . What can be options now

1) Did you or your wife contribute to a traditional IRA or Roth IRA?

yes or no ?( Moved funds from retirement brokerage A to retirement brokerage B, but didnt contribute anything)

2) Should i report Rollover IRA  account to IRS during tax returns? I am assuming Yes.  I don't see new retirement brokerage B on 1099 R form.

I made a call and received  1099R from previous retirement brokerage A. retirement brokerage B said i didnt withdraw anything so there wont be 1099R form

1) Did you or your wife contribute to a traditional IRA or Roth IRA?
Yes or No ( Moved the funds from 401k of retirement brokerage A to IRA of retirement brokerage B , we didnt contribute anything to this Rollover IRA account)
2) Should i report Rollover IRA  account to IRS during tax returns? I assume Yes. How does IRS know that funds are not withdrawn for personal use and its just moved to rollover IRA . I dont see name of retirement brokerage B on the 1099Rform.

Question 1:  Answer NO.  You did not make any contributions this year (2022) per your own comments.  The only time you would answer Yes is when you actually make a contribution to an IRA - and you only report the actual dollar contribution for that year only.  401k's don't require you to report anything to the IRS unless you actually take money out or do a Rollover.  One the rollover is done, you no longer report anything.  (Until you actually do a Withdrawal from the account.

Question 2:  Answer is NO - there's nothing to report now. Which is why Fidelity hasn't provided any Docs for you this tax season.  

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@santhosh1987 wrote:

Thank you for reply. Just trying to clarify.

Question 1: 

I didnt make contributions but moved from one retirement account with 401k  to another retirement account (this is Roll over IRA) - so it should be yes right?

 

Question 2:  I have 1099R from previous retirement account(because of move from 401k to new retirement account IRA) and shouldn't 1099R  be added in turbo tax retirements and savings section?

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Contributions are not rollovers, and rollover are not contributions.  Different type of transaction with different rules.

If the original 401k plan issued a 1099-R, you must report it.  One of the questions should be something like "what did you do with the money" and one of the choices is "I rolled it all over into an IRA or other qualified plan."

Thank you very much for patience.

After i added 1099R form , only question asked was "Did you move this money from a 401(k) to a Roth 401(k)? - I answered No (since its rollover IRA)". But didnt ask what i did with money, not sure how IRS know i didn't use this 401k from previous retirement account, instead its moved to Rollover IRA. 

What code is in box 7 on the 1099R?   Is it a G for direct rollover?  As long as you didn't roll it over to a ROTH account it is not taxable.   It should be on line 5a and 0 taxable on line 5b and say Rollover by it.

Thank yoy. I see it as G. That explains.

I added 1099R in retirement and savings section.

Since your Form 1099-R has a code G it won't be taxable, as it is properly coded as a direct rollover.

You properly have added it as you said, to your Retirement and Savings Section.

To Preview your Form 1040 before filing you can:

1. Sign in to your TurboTax account
2. Open or continue your return
3. Select Tax Tools from the menu (if you don't see this, select the menu icon in the upper-left corner)
4. With the Tax Tools menu open, you can then:
   • Preview your entire return: Select Print Center and then Print, save or preview this year's return (you may be asked to register or pay first)
   • View only your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu

Click here for where to enter your Form 1099-R.

 It sounds like you've got this! Please feel free to contact us in TurboTax Community if you have additional questions.

@Opus 17 @LindaS5247 : I have a follow up question to this regarding my rollover from previous employer to my IRA accounts.  I had the following transactions:

1.) Roth 401K funds transferred to Roth IRA account - received 1099 with distribution code G

2.) Non-Roth 401K funds transferred to Rollover IRA Account - received 1099 with distribution code H 

Questions:

i) All of these 1099 forms have some funds in box 5 " Employee contrib/desig Roth contrib or insurance premiums.  Where is this amount coming from? I've called Fidelity a couple of times and they are unable to tell me and asked me to check with a CPA.  Wondering if one of you can guide?

ii) I received another 1099 with distribution code 1B;  I am still trying to figure out what this is considering I have not withdrawn any fund.  Any guidance on how I can decipher this amount of $82.99 in box 5 (rest of the form is blank)?

Thanks!

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@gulsheenk wrote:

@Opus 17 @LindaS5247 : I have a follow up question to this regarding my rollover from previous employer to my IRA accounts.  I had the following transactions:

1.) Roth 401K funds transferred to Roth IRA account - received 1099 with distribution code G

2.) Non-Roth 401K funds transferred to Rollover IRA Account - received 1099 with distribution code H 

 

Questions:

i) All of these 1099 forms have some funds in box 5 " Employee contrib/desig Roth contrib or insurance premiums.  Where is this amount coming from? I've called Fidelity a couple of times and they are unable to tell me and asked me to check with a CPA.  Wondering if one of you can guide?

 

ii) I received another 1099 with distribution code 1B;  I am still trying to figure out what this is considering I have not withdrawn any fund.  Any guidance on how I can decipher this amount of $82.99 in box 5 (rest of the form is blank)?

 

Thanks!

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Check your forms again.

1.) Roth 401K funds transferred to Roth IRA account - received 1099 with distribution code G

This is the wrong code, this type of transaction should be reported with code H. 

2.) Non-Roth 401K funds transferred to Rollover IRA Account - received 1099 with distribution code H 

Wrong code, this should be reported with code G. 

I'm not familiar with box 5, this is what the IRS instructions say.

Box 5. Employee Contributions/Designated Roth Contributions or Insurance Premiums

Enter the employee's contributions, designated Roth contributions, or insurance premiums that the employee may recover tax free this year (even if they exceed the box 1 amount). The entry in box 5 may include any of the following: (a) designated Roth contributions or contributions actually made on behalf of the employee over the years under the plan that were required to be included in the income of the employee when contributed (after-tax contributions), (b) contributions made by the employer but considered to have been contributed by the employee under section 72(f), (c) the accumulated cost of premiums paid for life insurance protection taxable to the employee in previous years and in the current year under Regulations section 1.72-16 (cost of current life insurance protection) (only if the life insurance contract itself is distributed), and (d) premiums paid on commercial annuities. Do not include any DVECs, any elective deferrals, or any contribution to a retirement plan that was not an after-tax contribution.

Generally, for qualified plans, section 403(b) plans, and nonqualified commercial annuities, enter in box 5 the employee contributions or insurance premiums recovered tax free during the year based on the method you used to determine the taxable amount to be entered in box 2a. On a separate Form 1099-R, include the portion of the employee's basis that has been distributed from a designated Roth account. See the Examples in the instructions for box 2a, earlier.

That probably explains the separate 1099-R.  But this rest is cloudy to me too.  Did you ever make excess contributions to the 401k, or had your contributions declared excess because the plan failed its non-discrimination testing?

I will ask a smarter expert, @dmertz 

Yes, box 5 of Form 1099-R is amounts that are included in box 1, but are not taxable either because it represents your after tax contributions (basis), or amounts paid for your health insurance coverage (usually only on a pension). This includes Roth contributions.

Code 1B in box 7 represents an early distribution from a Roth account. If you have no number in box 1 or 2a, I don't know why they would issue the 1099-R at all. It will not impact your return unless there is a number in box 1 or 2a. 

As Opus 17 said, you (or the plan) have the codes swapped.  Code H is for a rollover from the designated Roth account in the 401(k) to the Roth IRA.  Code G is for the rollover from the traditional account in the 401(k).

Code G in this case could indicate a rollover to either a traditional IRA or a Roth IRA, or a combination of such rollovers.  You would have to review your transaction summaries to understand what is being reported on the code-G From 1099-R.  If this Form 1099-R represents a split rollover with the after-tax portion going to the Roth IRA and the pre-tax portion going to the traditional (rollover) IRA, which is a distinct possibility given the non-zero amount in box 5, you'll need to split the code-G Form 1099-R into two for entry into TurboTax, one for each portion of the rollover.

The code 1B Form 1099-R represents the overall investment loss in the designated Roth account in your 401(k), the portion of contribution basis that exceeded the amount rolled over to your Roth IRA.

The amounts in box 5 represent you after-tax basis.  Given that you received the code-1B From 1099-R, I would expect the amount in box 5 of the code-H Form 1099-R to equal the amount in box 1 and the entire amount rolled over from the designated Roth account in the 401(k) to the Roth IRA has become contribution basis in the Roth IRA.  TurboTax will track this addition to your Roth IRA contribution basis when you enter the code-H From 1099-R.

@dmertz @Opus 17 @JulieS 

Thanks for your messages.  You all are correct; I mixed my codes in my note above. Apologies for that.  Good news is that I accurately entered them in Turbo Tax.  

So regarding 1099-R form with code 1B, I do not have any number in box 1 or 2a or any other box than in box 5.  Thanks @dmertz for explaining that 1B represents "the overall investment loss in the designated Roth account in your 401(k), the portion of contribution basis that exceeded the amount rolled over to your Roth IRA" So, in Turbo Tax, after entering information, it asks for :

a.) Was this a plan loan that you had when you left a job or the plan ended?  I have selected "No, this was another type of distribution".  The other option is "Yes, this was a qualified plan loan offset". 

Please let me know if this needs to be changed.  

b.) Then the next screen prompts me with "What did you do with the money from Fidelity Investments <Employer name> 401K plan? And it has the following options:

* I moved the money to another retirement account (or returned it to the same retirement account)

* I did something else with it (cashed out, etc.)

None of these options align with overall investment loss in the designated 401K Roth account.  What should I do?

Thanks!

@dmertz : a friendly reminder for the two Turbotax related questions above. 

"So, in Turbo Tax, after entering information, it asks for :

a.) Was this a plan loan that you had when you left a job or the plan ended?  I have selected "No, this was another type of distribution".  The other option is "Yes, this was a qualified plan loan offset"."

TurboTax asks this question because for a qualified plan loan offset from a designated Roth account of someone under age 59½ codes 1, B and M all apply.  However, only two codes are permitted on a Form 1099-R, so the IRS instructions for such a distribution indicate that the code M should be omitted, requiring TurboTax to ask this question to determine if a code M was omitted.  Of course a plan loan offset cannot have a zero gross-distribution amount, so it's obvious that this was not a qualified plan loan offset.  TurboTax isn't programmed quite well enough to figure that out and bypass the unnecessary question.  All that said, you correctly answered No.

Regarding question b), CFR 1.402A-1 Q&A-6(b) says:

(b) If the entire account balance of a designated Roth account is rolled over to another designated Roth account in a direct rollover, and, at the time of the distribution, the investment in the contract exceeds the balance in the designated Roth account, the investment in the contract in the distributing plan is included in the investment in the contract of the recipient plan.

This regulation specifies that the rollover was to another designated Roth account, however, Treasury Decision 9324 IRS 2007-22 I.R.B.1302 which established CFR 1.402A-1 says that the same thing applies to a rollover to a Roth IRA.  Because you did roll the entire balance of the designated Roth account over to the Roth IRA, this means that you should enter this Form 1099-R and indicate that you moved the money to another retirement account and that you rolled over the entire amount.  Doing so will cause TurboTax to add the box-5 amount to your basis in Roth IRA contributions but will have no effect on your tax return itself.  (I'm not quite sure why Fidelity did not simply include this amount in box 5 of the code-H Form 1099-R along with the amount they did include there.  The amount in box 5 is permitted to exceed the amount in box 1.)

@dmertz :  thanks for your comprehensive responses to my questions for 1099 form with code 1B

1B represents "the overall investment loss in the designated Roth account in your 401(k), the portion of contribution basis that exceeded the amount rolled over to your Roth IRA" 

Best, 

Gulsheen

@dmertz :  follow up questions as I filled Turbo tax --> Federal Taxes --> Deductions & Credits ---> Retirement and Investments --> Traditional and Roth IRA Contributions 

I included $6,000 towards 2022 traditional IRA between Jan 1, 2023 and April 18, 2023  and stated the entire $6000 amount switched from traditional IRA contribution to a Roth IRA contribution (back door Roth, basically).  It then asked for Explanation Statement; it auto filled some Explanation fields (after I clicked on their link for examples).  I have the following questions:

1.) What should I state for the following fields?

a.) The Amount Transferred (Recharacterization plus earnings or losses): 

(I have already stated $6,000 in the field "The Amount Recharacterized)

b.) Reason for the Recharacterization: 

2.) It already has increased by Federal Tax Due amount - understandable! 

3.) After selecting continue through screens (I did not contribute towards 2022 Roth, Skipped the screen to share Roth IRA value on Dec 31, 2022), it states:

Your income is too high to contribute and that $6K contribution into Roth is considered excess contribution.  The ensuing screen states "Because you made an excess contribution of $6K to your Roth IRA, you will owe a 6% penalty ($360) each year that excess money remains in the IRA"

What am I missing or entered inaccurately for TurboTax to qualify it as a backdoor Roth transaction? 

A "backdoor" Roth involves a Roth conversion, not a recharacterization from traditional to Roth.  You did not "switch" your contribution from traditional to Roth.  Go back and tell TurboTax that you recharacterized $0, not $6,000 (or just delete the $6,000 entry where you are asked how much was switched).

It worked!  Thanks a BUNCH! 

So do I need to do any other step or update any other screen to notify that it's back door Roth ?

Best!

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@gulsheenk wrote:

It worked!  Thanks a BUNCH! 

 

So do I need to do any other step or update any other screen to notify that it's back door Roth ?

 

Best!

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So far, you have described a rollover from a designated Roth 401k account to a Roth IRA, and the rollover of a pre-tax 401k account to a traditional pre-tax IRA.  

In other words, pre-tax to pre-tax and Roth to Roth.

Nothing you have described is a conversion, front or "back" door.  A conversion would be transferring money from a pre-tax account to a Roth account and paying income tax on it.  Why do you think you have a conversion?

The Roth conversion performed in 2023 is reportable on your 2023 tax return when you receive the 2023 Form 1099-R (most likely code 2 or code 7, depending on your age) next year.

(Hopefully you actually did a Roth conversion and not a recharacterization.)