Turbo Tax incorrectly interprets my 1099-R

[Anonymous]

I have a 1099-R from rolling a conduit (traditional) IRA into my 401k plan. I believe the 1099-R is filled out correctly. It has the amount in box 1, 0 in box 2a, and code G in box 7.

When I enter the details into TT, it says "You indicated that you converted a traditional IRA to a Roth IRA with Code G in Box 7. However, if this is true it should have Code 1, 2, or 7 instead." I believe this message is wrong, as this 1099-R has nothing to do with a Roth IRA.

The IRS instructions for the form say "For an amount in a traditional IRA or a SEP IRA paid
directly to an accepting employer plan, or an amount in a SIMPLE IRA paid directly to an accepting employer plan after the first 2 years of plan participation, enter the gross amount in box 1, 0 (zero) in box 2a, and Code G in box 7"

How does one report such a bug to TurboTax?

[JulieS]

The money you moved from your IRA to a new 401(k), is called a rollover. Hopefully, it shows the code "G" in box 7. If it does, just enter the form in the 1099-R section.

If you have a "1" or "2" in box 7, you will need to watch for the screen titled, "What did you do with the money from (your broker's name)?" Pick the first answer, "I moved the money to another retirement account."

Pick the first answer to the next question, "I rolled over all of this money to an IRA or other retirement account."

That will show the distribution on your return, but it will not be added to your taxable income. 

[seattletom1]

I believe the questions is, "If I enter code G from box 7 for a rollover, why does turbo tax say ""You indicated that you converted a traditional IRA to a Roth IRA with Code G in Box 7. However, if this is true it should have Code 1, 2, or 7 instead."  Based on your response it should not as that is the correct way to enter a rollover.

[Anonymous]

Yes, @seattletom1 is correct. These screenshots illustrate the issue.

[fanfare]

you can 

1. contact customer support to complain.
2. wait for an update to Turbotax to see if this is fixed in the near future.

[168gr]

I am having the same problem. This is definitely a TurboTax bug.

Every year I roll my SEP-IRA over into TSP to zero out IRA accounts prior to doing Roth conversions of nondeductible tIRA contributions.

This time, TurboTax thinks G in block 7 means the distribution was a Roth conversion. This is incorrect and contrary to the instructions on the 1099-R itself: "G-Direct rollover of a distribution to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA."

Last year TurboTax did it correctly. I just checked and my 1099-R is exactly the same as it was last year (except for the $ amount).

It does seem to be doing the actual math correctly, though. Finishing that section did not increase my tax liability (as an actual Roth conversion would have).

[Chuckles960]

I thought threads such as this one were a good way to get TT bugs fixed, but this major bug hasn't been fixed.

Is it a problem if I just go ahead and submit, ignoring the error? Will TT prevent me from submitting? If I am able to submit, will this get flagged at IRS?

PS Regarding "It does seem to be doing the actual math correctly..." that is because the 1099-R correctly shows the taxable amount as 0. But there is no way to provide correct information about where that money went, so it could potentially upset the IRS...

[dmertz]

This is a minor bug because you can simply ignore this entirely bogus message from the online version of TurboTax.  Given that it's minor and can be ignored, don't expect a fix anytime soon.

[smallsheep]

Does anyone have an update on this? I talked to support but they had "no way of reaching out to the tech team" and "if this is an issue, they already know and are working on it." I have the same situation as @Anonymous but like @Chuckles960 , I'm concerned that this might still show up incorrectly on my forms and get flagged with IRS.

[AmyC]

The IRS only gets the tax forms, no worksheets or other extras. As long as the forms are correct and there is no tax showing on a rollover, where it is rolled to does not matter. The IRS gets all account data for Dec 31. They know where it went. Take a look at your 1040, line 5b. If that number is correct, that is all that matters regarding the rollover.

@smallsheep

[smallsheep]

@AmyC , thank you for the quick response. To confirm, I should ignore the warnings and then check that the total amount for the combined rollovers is accurate on Form 1040 line 5b, correct? I went to my print center under tools (I am using TurboTax online) but am not able to see the forms. Could you confirm that I need to pay first before I can do this type of review, or is there another way to access them? (If the amount on the form is incorrect, I won't be able to submit my taxes with TurboTax, so it would not make sense to pay...)

[JillS56]

No, you do not have to pay first to see your 1040.  You are able to view your 1040 so that you could check Line 5b.   To see your Form 1040 in the Online version:

1. Go to Tax Tools in the menu list on the left-hand side of the screen;
2. Click on Tools;
3. Click on View Tax Summary;
4. To the left click on Preview my 1040;
5. Scroll down 1040 until you see Line 5b.

You can verify the amount is correct for the rollover and then you should be able to e-file.