IRA to Solo 401(k)
I moved money from an IRA to a Solo 401(k). The paperwork was marked as a transfer and the money moved from the IRA to Solo 401(k) – the assets transferred “in kind.” The previous custodian did not issue a 1099 for the transaction because they considered this a transfer.
Will the IRS accept this transaction (although it will not be reported on the taxes)? Or do we need to somehow modify the transaction?
Would we need to code this transaction as a direct rollover (meaning going back to the IRA firm and having them complete some type of coding change on their end) Or could it be left alone as a transfer with no 1099 issued?
Permalink Submitted by Alan - IRA critic on Tue, 2018-02-27 18:30
This type of rollover must be reported on a 1099R. A non reportable transfer can occur between IRAs of like kind, but not for a rollover to a qualified plan. You should request the proper 1099R from the IRA custodian, then report the rollover on line 15 of Form 1040. However, because the solo K will not issue a 5498 to report the rollover contribution, you must include an explanatory statement with your return about the rollover. If you leave this as is, there could be unintended consequences. For example, the IRA custodian might discover from an internal audit that they should have been reporting these and then will issue a late 1099R. You would then have to amend your return if you did not report the rollover. If the IRA custodian refuses to issue a 1099R, you should still report the rollover on your return.