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401K partial rollover to ROTH with 1099-R indicating $0 in block 2A (Taxable Amount)

Forum|Forum|1 year ago
February 11, 2025
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I'm not sure how to enter this into Turbotax. The 1099-R from my source 401K correctly indicates $50K in block 1, has 0$ in Block 2a, but NO check in box 2b. It also shows no State distribution amount. There was no tax withholding by the 401K source (I made separate Federal & State estimated tax payments for that quarter). It has the correct distribution code "G" in block 7 for the rollover. I did not see a place later in Turbotax to create the new (taxable) Roth or indicate estimated taxes paid on the amounts.

I can enter the estimated tax payments, but Turbotax doesn't appear to take the 50K as a taxable income (wants to give me the tax prepayment as part of a large federal refund).

What am I missing?

Best answer by dmertz

Since you indicate that you expect the part rolled over to the Roth IRA to be taxable, I assume that there is nothing in box 5 of this Form 1099-R. If there is nothing in box 5, the details of this Form 1099-R imply that you instructed the plan to do a direct rollover of the entire amount to a traditional IRA but somehow you diverted some of the funds to a Roth IRA instead. (Either that or the plan issued a Form 1099-R with an incorrect taxable amount in box 2a.) This means that the Form 1099-R does not reflect the rollovers that actually occurred.

Whether or not there is anything in box 5, to accommodate TurboTax you'll need to split the Form 1099-R into two, one for the portion rolled over to the traditional IRA and another for the portion rolled over to the Roth IRA. For the portion rolled over to the Roth IRA you'll need to put the taxable amount in box 2a; with a zero in box 2a TurboTax will treat the portion rolled over to the Roth IRA as nontaxable. Because the split Forms 1099-R will not sum to the total in box 2a of the original, these probably should be done as substitute Forms 1099-R (Forms 4852).

D

dmertzAnswer

Employee

Since you indicate that you expect the part rolled over to the Roth IRA to be taxable, I assume that there is nothing in box 5 of this Form 1099-R. If there is nothing in box 5, the details of this Form 1099-R imply that you instructed the plan to do a direct rollover of the entire amount to a traditional IRA but somehow you diverted some of the funds to a Roth IRA instead. (Either that or the plan issued a Form 1099-R with an incorrect taxable amount in box 2a.) This means that the Form 1099-R does not reflect the rollovers that actually occurred.

Whether or not there is anything in box 5, to accommodate TurboTax you'll need to split the Form 1099-R into two, one for the portion rolled over to the traditional IRA and another for the portion rolled over to the Roth IRA. For the portion rolled over to the Roth IRA you'll need to put the taxable amount in box 2a; with a zero in box 2a TurboTax will treat the portion rolled over to the Roth IRA as nontaxable. Because the split Forms 1099-R will not sum to the total in box 2a of the original, these probably should be done as substitute Forms 1099-R (Forms 4852).

K

K-DogAuthor

Thank You for your rapid reply.

In re-reading my original post, I realize I confused people with my wording. I rolled over PART ($50K) of my 401k, but the ENTIRE roll-over amount ($50K) was rolled into a ROTH with another money manager, so the entire portion would be taxable. I believe the answer is the same, the entire amount is taxable by both Federal and State, and the 1099-R I received is in error. When I enter it into Turbotax like this, the end results appear as I would expect them. I will seek to get a corrected 1099-R.

D

dmertz

Employee

Yes, my reply is essentially the same. The Form 1099-R reports a nontaxable rollover to a traditional IRA, but that's ultimately not what happened. If you requested that the 401(k) make the rollover to a Roth IRA, they have made the error in reporting $0 taxable (absent any after-tax amount in box 5 of the Form 1099-R). If the request you made did not specify a rollover to a Roth IRA, it's not their error and they are unlikely to change the Form 1099-R that they originally issued.