Context: My employer allows AfterTax contribution in my 401K which I can immediately roll-over to an In-Plan Roth 401K bucket.
I received a 1099-R form the 401K Admin and in Box 1, shows $33,000 in gross distribution and in Box 2a, the taxable amount is only $83.00 because I'm rolling over after tax dollars and only $83.00 was the gain during the time of rolling over the funds. This year, TurboTax calculated a penalty of $1,600 in schedule 1, line 18. I did this last year and no penalty was assessed. I can't locate the worksheet how this penalty was calculated and why was there a penalty to begin with. Can anyone in the community help? Thank you.
This entry isn’t related to your rollover. Schedule 1 line 18 is an adjustment to income (lowers your taxable income) and is generated when you enter an early withdrawal penalty that you paid from Form 1099-INT box 2 or Form 1099-OID box 3.
Please make sure that you enter your Form 1099-R for the rollover in the retirement section:
This entry isn’t related to your rollover. Schedule 1 line 18 is an adjustment to income (lowers your taxable income) and is generated when you enter an early withdrawal penalty that you paid from Form 1099-INT box 2 or Form 1099-OID box 3.
Please make sure that you enter your Form 1099-R for the rollover in the retirement section:
Thank you so much Dana. I totally forgot about early withdraw of a few CDs. I read it as early withdraw of savings so immediately my mind went to retirement savings and not investments savings. Now I realize the $1,600 became an adjustment of income on my 1040. Appreciate the quick answers.