401 to IRA rollover causes Total Income to inflate

Forum|Forum|2 years ago
February 8, 2024
3 replies
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I did a rollover (21,000) from 401K To traditional IRA, separate institutions. Although I was not taxed on the rollover, It did jump my Total Income by 21,000. I am currently on certain government low income programs, but now this will disqualify me. I have to show proof of income each year to requalify. Any way around this?

TurboTax Deluxe Online

Best answer by dmertz

The distribution constitutes nontaxable income. "Income" simply means that the distribution is required to be reported on your tax return, in this case included on Form 1040 line 5a but not on line 5b. This nontaxable income has no other effect on your tax return.

fanfare

Employee

A Rollover is not income.

Ignore any TurboTax summary that shows otherwise.

@socalmary .

LeticiaF1

As fanfare mentioned, rollovers are not income. You will have to make sure to enter the information correctly into the TurboTax, here are the steps you need to follow:

Search for 1099-R and select the Jump to link in the search results.
Continue through the screens to import or enter your 1099-R form.
When asked Tell us if you moved the money through a rollover or conversion select I rolled over some or all of it to an IRA or other retirement account within the time limits (normally 60 days) and select Continue.
On the next screen, Did you roll over all of this (Box 1) to another retirement account? answer Yes, I rolled over to an IRA or other retirement account (or returned it to the same account) and select Continue.