Why is Turbotax categorizing a 401k rollover to a traditional IRA as income?

Forum|Forum|1 year ago
March 27, 2025
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Best answer by dmertz

The tax code defines all distributions from a 401(k) as being "income." That just means that the transaction is required to be reported on your tax return. What matters to you is the amount of taxable income resulting from this transaction, which is zero on the amount rolled over from the 401(k) to the traditional RIA.

DoninGA

Employee

Look at your federal tax return, Form 1040 Line 5b. If there is a 0 (zero) on Line 5b it was Not entered as taxable income. And there should be the word ROLLOVER entered to the left of 5b.

Click on Tax Tools on the left side of the online program screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.

mglauner

Did you receive a 1099-R with a Code G in Box 7 indicating the rollover?

If not, enter your 1099-R as issued and pay close attention to the follow-up questions, where you can indicate you rolled over the funds to a Traditional IRA.

You're correct, it should not be taxable income in this case. If you're using TurboTax Online, be sure to clear your Cache and Cookies before stepping through the section again.

@dcb415