Solved

401k accidentally rolled to non qualified account

Forum|Forum|3 years ago
February 28, 2023
1 reply
0 views

I accidentally rolled my 401k to non qualified account. Not a lot of money and just want to pay the tax. But the 1099R shows a rollover. How do I handle this in TurboTax, I am 62.

Best answer by dmertz

The instructions for Form 4852 say to contact the IRS, but I think that that is more to let the IRS know if the payer made an error that they have an obligation to correct or to help the recipient understand the Form 1099-R (or W-2) in the case where the recipient is simply mistaken about the form being incorrect (which is often the case). In your case it's clear that the payer did not make a mistake and the Form 1099-R does not represent what happened because of what you did with the check.

An alternative would be to change the taxable amount in box 2a to equal the amount in box 1 and enter code 7 instead of code G in box 7 without treating it as a substitute Form 1099-R. (With no tax withholding, TurboTax will not include the Form 1099-R details in with your e-filing.) This will cause TurboTax to treat it as taxable on Form 1040 line 5b and not rolled over, and allow e-filing, but it's possible that the IRS will detect that you overreported the income represented by the original Form 1099-R, a copy of which will have been sent to the IRS by the payer. If the IRS does detect the discrepancy, you could provide explanation at that time instead of preemptively providing explanation with the Form 4852.

D

dmertz

Employee

You'll need to enter a substitute Form 1099-R (Form 4852) the same as the original except that you'll need to show the taxable amount in box 2a (probably the same as the amount in box 1, unless there is an amount in box 5) and with code 7 in box 7. You do this by marking the box in TurboTax that says that you need to file a substitute Form 1099-R. Filing Form 4852 requires that you mail your tax return.

R

Relaytech Author

Thx for the answer, I noticed in TurboTax it says something about contact IRS. Not sure what that is all about.

D

dmertzAnswer

Employee

The instructions for Form 4852 say to contact the IRS, but I think that that is more to let the IRS know if the payer made an error that they have an obligation to correct or to help the recipient understand the Form 1099-R (or W-2) in the case where the recipient is simply mistaken about the form being incorrect (which is often the case). In your case it's clear that the payer did not make a mistake and the Form 1099-R does not represent what happened because of what you did with the check.

An alternative would be to change the taxable amount in box 2a to equal the amount in box 1 and enter code 7 instead of code G in box 7 without treating it as a substitute Form 1099-R. (With no tax withholding, TurboTax will not include the Form 1099-R details in with your e-filing.) This will cause TurboTax to treat it as taxable on Form 1040 line 5b and not rolled over, and allow e-filing, but it's possible that the IRS will detect that you overreported the income represented by the original Form 1099-R, a copy of which will have been sent to the IRS by the payer. If the IRS does detect the discrepancy, you could provide explanation at that time instead of preemptively providing explanation with the Form 4852.