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Partial cash distribution of 401K, most rolled over into other IRAs

Forum|Forum|2 years ago
January 29, 2024
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I cashed out my 401K account. Most was rolled over into 2 other IRA accounts. I did take a partial cash distribution, which was taxed for Federal and State. The total distribution shows on form 1099-R with no Taxable amount. How do I report the amount that rolled over into 2 other IRAs? And how do I report the cashed out amount with taxes withheld?

Best answer by dmertz

A direct rollover reported with code-G is required to be entirely deposited into qualified retirement accounts. If the plan withheld any amount for taxes or the plan distributed some to you in cash, that should have been reported on a separate Form 1099-R with code 1, 2 or 7 and you would need to contact the plan obtain a corrected code-G Form 1099-R and a Form 1099-R with code 1, 2 or 7 for the part not rolled over.

If you yourself inappropriately diverted some of the funds to cash or estimated taxes (not tax withholding), the Form 1099-R is no longer a valid reporting of the transaction. You would need to submit substitute Forms 1099-R, one with code G for the portion directly rolled over to the traditional IRAs and another with code 1, 2 or 7 for the portion not rolled over.

J

JulieS

Yes, you need to report the 1099-R form that you received from the payer. Enter it exactly as it is on your 1099-R

To enter it in TurboTax Online:

Open your return.
Select Federal, then Wages & Income.
Scroll down to IRA, 401(k), Pension Plan Withdrawals (1099-R), under Retirement Plans and Social Security, select Start or Revisit to the right.
Answer Yes to Did you get a 1099-R in 2023?
Follow the screen instructions to enter the 1099-R form.
When you get to Tell us if you moved the money through a rollover or conversion, select the answer that describes your situation.
When you get to Did you roll over the gross amount of $XXX (Box 1) to another retirement account?, answer No and enter the actual amount rolled over.
Answer the rest of the questions in the section.

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G

GolfnDaveAuthor

Working in TurboTax Premier . . . .

I reported all the info on form 1099-R and that part went okay, but I never saw anything to address the cash distribution amount and taxes withheld from the partial cash distribution. Form 1099-R makes it look like the Total Amount was rolled over into another IRA (box 7 = G), but that's not the case. How/where to I enter the Cash distribution and taxes withheld?

D

dmertzAnswer

Employee

A direct rollover reported with code-G is required to be entirely deposited into qualified retirement accounts. If the plan withheld any amount for taxes or the plan distributed some to you in cash, that should have been reported on a separate Form 1099-R with code 1, 2 or 7 and you would need to contact the plan obtain a corrected code-G Form 1099-R and a Form 1099-R with code 1, 2 or 7 for the part not rolled over.

If you yourself inappropriately diverted some of the funds to cash or estimated taxes (not tax withholding), the Form 1099-R is no longer a valid reporting of the transaction. You would need to submit substitute Forms 1099-R, one with code G for the portion directly rolled over to the traditional IRAs and another with code 1, 2 or 7 for the portion not rolled over.