Question

HELP!! Withdrawal of Retirement Funds

Forum|Forum|6 years ago
September 23, 2019
2 replies
0 views

I withdrew funds from the retirement account. When I went to a bank office, I was pretty much forced to put into an investment account. I just wanted to get out of there and thought I'll just withdraw it from there. So, I did. Now I got a notice from IRS that I didn't file my tax correctly. Does this mean I will tax twice for the same funds!?! I'd appreciate your responses!!

VolvoGirl

Employee

No, not twice. You will get a 1099R for the retirement withdrawal. It will be taxable. Then if you put it in a personal investment account and then took it out you may have to report a Sale from the investment.

You get a 1099B for sales. You only pay tax on any Gain you made (Sales price - what you put in). If you got less than you invested you can deduct a Loss.

Did you report the 1099R on your tax return? It should show up on 2018 1040 line 4b as taxable. Or didn't you report the 1099B?

L

leneanne86Author

Thank you so much!! I did get 1099-R from both bank and "retirement". I only filed the one from the bank. 😞 I'm afraid I'm going to owe a lot + penalty.

VolvoGirl

Employee

Oh, was the investment at the bank into another IRA account? You still needed to report the first 1099R and say you rolled it over to the new IRA account. Then the first 1099R won't be taxable.

macuser_22

Employee

If you took a distribution for a retirement account then it was probably a Traditional or Roth IRA and the financial institution would have issued a 1099-R for the year that the distribution took place. You were required to report that 1099-R on your tax return. It a Traditional IRA then probably the 1099-R box 1 amount would be taxable income, of a Roth IRA then it may or may not be taxable depending on your circumstances. Either way failure to report the 1099-R at all will make the IRS assume that it was all taxable and they will bill you.

What does the letter say? What tax year is this for?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**