401k traditional rollover to IRA traditional - Will this amount affect my tax bracket as it looks like I will fall under a higher tax bracket after including this amount?

Forum|Forum|6 years ago
March 8, 2020
2 replies
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I am seeing in TurboTax (2019 home & business) is calculating 401(K) rollovers from Traditional 401(K) to Traditional IRA's as Pensions-nontaxable and adds the amount to my 2019 total personal income. Will this amount affect my tax bracket as it looks like I will fall under a higher tax bracket after including this amount? If I remember correctly, 401(K) should NOT affect my tax bracket.

Some information that may help answer my question. I received form 1099-R (from a retirement services company on behalf of previous employer) and the only amount on it is in Gross Distribution. There is no amount in Taxable amount. Total distribution is checked. Distribution code is G. There is no state tax withheld.

Advice needed. Thank you in advance. 🙂

TurboTax Home & Biz Windows

Best answer by AnnetteB6

As stated by user PatY, it is more important to look at your actual tax form to understand whether or not your rollover from your 401k to Traditional IRA is actually affecting your tax return.

As you go through TurboTax, the amount of the distribution that was rolled over will be shown as 'income' to you on various summary screens. This is done as a sort of checks and balances so that you can visually see what has been entered into your return on the income side of things. It does not necessarily mean that it is taxable income.

You are correct in stating that the rollover will not affect your tax bracket and should not be taxable on your return.

Use the information in the following TurboTax article to preview your actual Form 1040 to see that the rollover amount is reported on line 4c with the designation ROLLOVER and line 4d taxable amount is $0.

Preview my Form 1040

@skyper812

PatY

I did a rollover last year and it blew up my gross also but if you look at the form (1040 line 4b) it should say "rollover" and Turbo Tax will not consider it as income with respect to calculating your taxes owed.

AnnetteB6Answer

As stated by user PatY, it is more important to look at your actual tax form to understand whether or not your rollover from your 401k to Traditional IRA is actually affecting your tax return.

You are correct in stating that the rollover will not affect your tax bracket and should not be taxable on your return.

Preview my Form 1040

@skyper812

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socalmary

I also have this same issue, with a twist. Although I was not taxed on the 401K to IRA rollover, It did jump my total income by 21,000.00 rollover amount. I am on certain government low income programs , but now this will disqualify me. (I have to show a copy of my income each year to re-qualify.) Since the amount is still in a qualified IRA, I feel it should not show as Income. Any way around this?