Form 1099B has a B and a G in the distribution code Box 7. The IRA/SEP/SIMPLE box is checked also. This combo will not work in TT. Can I leave IRA box unchecked?

Forum|Forum|1 year ago
March 17, 2025
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I am not able to get the 1099R corrected, company says it is correct. Turbo Tax says it is not. Any suggestions?

TurboTax Online

dmertz

Employee

I assume that you mean that it's a Form 1099-R.

As you discovered, a Form 1099-R that includes code B in box 7 is not permitted to have the IRA/SEP/SIMPLE box marked because code B means that the distribution is not from any kind of IRA. You should try to escalate this with the payer to obtain a corrected form.

It's impossible to guess from the limited information provided if the marking of the IRA/SEP/SIMPLE box is incorrect or if the code in box 7 is incorrect. It depends on the type of account from which the distribution was made. It seems more likely that they just marked the IRA/SEP/SIMPLE box inappropriately and the distribution is actually from a designated Roth account in a 401(k), 403(b), 457(b), and account that is not an IRA.

If you are unable to obtain a corrected form from the payer, the correct action would be to submit a substitute Form 1099-R with the appropriate correction, but doing so will prevent e-filing.

Is the Form 1099-R from a bank or from an employer-provided retirement plan?

KS_1Author

Yes, I meant 1099-R. Sorry for the typo.

The form is from Matrix Trust Company.

I have two 1099-R forms. The first was a transfer out of an employer Roth 401k - distribution code H. The second 1099-R is the issue. The funds were actually taken from a Roth 401k and put in a Traditional IRA for a short time, until they were moved to the new employer's Roth 401k. (I know - it was not wise to do this). I'm trying to complete the taxes for this client, which I can't do in Turbo Tax because of the error messages. The Matrix Trust Company says the 1099 R is correct. Thanks for any suggestions....

dmertz

Employee

OK, I think understand the reason for the marking of the Form 1099-R the way it was marked.

First, I think that you meant that you rolled the traditional account in the 401(k) over to a traditional IRA, which would have been reported on a Form 1099-R with code-G in box 7 and the IRA/SEP/SIMPLE box unmarked. A rollover from a Roth 401(k) account to any kind of traditional account is never permitted

Second, even though the Form 1099-R seems to report a rollover from a traditional IRA to a Roth 401(k) account, such a rollover is not permitted and, as such, there is no legitimate way to report such a rollover. It seems that Matrix Trust Company just made up their own reporting scheme out of thin air.

The only type of taxable rollover to a designated Roth account in a 401(k) that the tax code permits is an In-plan Roth Rollover (IRR). What should have happened is that the rollover be made from the traditional IRA to the traditional account in the 401(k), reported with code G in box 7 and the IRA/SEP/SIMPLE box marked, followed by an IRR reported with codes B and G in box 7 with the IRA/SEP/SIMPLE box unmarked.