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January 17, 2021
Solved

Word "Rollover" does not appear next to Form 1040 Line 5b in TurboTax

  • January 17, 2021
  • 2 replies
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I did a rollover of a 401(k) account (a nontaxable conversion of after-tax funds to a Roth). This was reported on a 1099-R with code G indicating a rollover. TurboTax Deluxe correctly reports the rollover amount on line 5a and zero on line 5b.

 

The IRS's Form 1040 instructions state that for rollovers, the word "Rollover" should appear next to line 5b.

 

A number of years ago this worked correctly in TurboTax.  For a few years now I have encountered this problem, but I could always fix it by overriding the "pension write-in text" field on TurboTax's Form 1040 Worksheet.  This year, however, the field cannot be overridden.  Any workarounds?

    Best answer by dmertz

    Wow, very observant of you.  I just did some testing of previous versions of TurboTax and this bug is been in TurboTax at least as far back as 2013, probably farther.  TurboTax is incorrectly omitting the ROLLOVER indication on a rollover of a qualified retirement plan to a Roth IRA (or an In-plan Roth Rollover)  if the taxable amount is $0.

     

    The only workaround I've been able to come up with is to use the CD/download version of TurboTax, switch to forms mode, open the code G 1099-R form, unmark box B5 that is presently indicating that the entire distribution was rolled over and instead fill in line B6 with the gross amount of the distribution.  However, this messes up TurboTax's tracking of your 2020 conversion contributions to your Roth IRAs and messes of TurboTax's 1099-R Summary, which could have negative effects elsewhere on your tax return if you also took Roth IRA distributions in 2020.

     

    My only other suggestion would be to print and mail your tax return after hand-writing in the ROLLOVER indication.  Printing and mailing would also be required if you were able to do an override to correct this (but, as you found, you can't).  I really don't like the idea of printing and mailing the tax return, though, because you are relying on the accuracy of the data transcriber for your IRS-recorded tax return to be correct.

     

    I suspect that the best approach might be to ignore the error.  You and the IRS will be getting a Form 5498 showing the rollover contribution to the Roth IRA and the code G on the Form 1099-R itself shows that there was indeed a rollover.

     

    @macuser_22 might be able to pass this bug report along to the moderators.  I suspect that since the bug has been around for so long and hasn't seemed to have caused any problems with the IRS for the affected taxpayers, it might not get much attention.

     

    Note that the problem also seems to happen with an indirect rollover from a qualified retirement plan to a Roth IRA (code 1 or 7) when the taxable amount is $0, but I've only checked some of those variations.

    2 replies

    dmertzAnswer
    Employee
    January 18, 2021

    Wow, very observant of you.  I just did some testing of previous versions of TurboTax and this bug is been in TurboTax at least as far back as 2013, probably farther.  TurboTax is incorrectly omitting the ROLLOVER indication on a rollover of a qualified retirement plan to a Roth IRA (or an In-plan Roth Rollover)  if the taxable amount is $0.

     

    The only workaround I've been able to come up with is to use the CD/download version of TurboTax, switch to forms mode, open the code G 1099-R form, unmark box B5 that is presently indicating that the entire distribution was rolled over and instead fill in line B6 with the gross amount of the distribution.  However, this messes up TurboTax's tracking of your 2020 conversion contributions to your Roth IRAs and messes of TurboTax's 1099-R Summary, which could have negative effects elsewhere on your tax return if you also took Roth IRA distributions in 2020.

     

    My only other suggestion would be to print and mail your tax return after hand-writing in the ROLLOVER indication.  Printing and mailing would also be required if you were able to do an override to correct this (but, as you found, you can't).  I really don't like the idea of printing and mailing the tax return, though, because you are relying on the accuracy of the data transcriber for your IRS-recorded tax return to be correct.

     

    I suspect that the best approach might be to ignore the error.  You and the IRS will be getting a Form 5498 showing the rollover contribution to the Roth IRA and the code G on the Form 1099-R itself shows that there was indeed a rollover.

     

    @macuser_22 might be able to pass this bug report along to the moderators.  I suspect that since the bug has been around for so long and hasn't seemed to have caused any problems with the IRS for the affected taxpayers, it might not get much attention.

     

    Note that the problem also seems to happen with an indirect rollover from a qualified retirement plan to a Roth IRA (code 1 or 7) when the taxable amount is $0, but I've only checked some of those variations.

    sselAuthor
    January 18, 2021

    Thank you for that quick, detailed, and thoughtful response.  I'd be grateful for a bug report being filed, so perhaps next year things will work better.

    February 7, 2022

    I am having the exact same issue as the OP but with TurboTax Premier download for PC 2021 tax year.  Can someone please report this bug again for this year?  Line 5a correctly shows the rollover amount, line 5b correctly shows zero, and the word "Rollover" should appear next to line 5b per 1040 instructions but does not.  This is for nontaxable conversion of after-tax funds in a 401k to a Roth IRA (no earnings to report due to a loss).  1099-R has code G. 

     

    macuser_22
    Employee
    February 7, 2022

    @Magiddy wrote:

    I am having the exact same issue as the OP but with TurboTax Premier download for PC 2021 tax year.  Can someone please report this bug again for this year?  Line 5a correctly shows the rollover amount, line 5b correctly shows zero, and the word "Rollover" should appear next to line 5b per 1040 instructions but does not.  This is for nontaxable conversion of after-tax funds in a 401k to a Roth IRA (no earnings to report due to a loss).  1099-R has code G. 

     


    I just tried that and indeed it does not show "Rollover" as it should - I will report to to the Moderators so they submit  a bug report to the developers.

    **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.**
    macuser_22
    Employee
    February 7, 2022

    Bug report submitted - do not expect a fix for this minor error for a month or more.

    **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.**