Tax-free IRA to 401(k) rollover not reported on 2023 tax return
I’m a CPA and met with a one-time tax consultation client recently who had rolled some money from a traditional IRA to their employer 401(k) in 2023 in a tax-free rollover. We discovered that they did not report this rollover on their 2023 tax return. They had received a 2023 Form 1099-R reporting the rollover, marked code G. Will they receive a matching notice from the IRS on this even though it is tax free…is there any reason to proactively amend their 2023 return to report the tax-free rollover?
Permalink Submitted by Alan - IRA critic on Fri, 2024-11-22 09:58
It should be amended to avoid a likely tax due Notice. Not only was the direct rollover not reported, but the IRS instructions indicate that an explanatory statement be included with the return because 401k plans do not issue 5498 forms confirming receipt of an IRA rollover. The 1040X could include this statement in the explanatory box on the form. The taxable income figures on p 1 will not change.
In other words, the IRS apparently does not necessarily believe that the code G is totally conclusive.