withdrawal from Roth IRA following rollover from Roth 401k and incomplete tax reporting
Hello Alan et al,
Here are the questions:
- What is the best way for this client to update the basis on his Roth IRA?
- Is it necessary to amend his 2022 tax return?
- Is there any disadvantage to taking the withdrawal from the Roth IRA before the basis is updated?
Here is the background:
- Client rolled $37K from a Roth 401k into a Roth IRA in 2022
- $32K represented the contributions that he made and $5K represented the growth
- The rollover was not reported on his 2022 tax return. He doesn’t remember receiving the 1099.
He now wants to withdraw money from his Roth IRA and is only 39 years old so he wants to limit it to his original contributions ($32K) or less so that it’s not taxed.
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2025-09-11 17:42
There should have been an H coded 1099R issued for 2022. Box 5 would have shown the Roth 401k contribution basis, but client may have a statement or other method of determining the contribution basis. This direct rollover would not have been taxable, which may explain why client has not heard from the IRS if he did not report it on line 5 of Form 1040.
The 32k was merged into his existing Roth IRA regular contribution basis if he has made any regular Roth IRA contributions along the way. If not, and his total basis is just the 32k, he can withdraw up to 32k anytime without tax or penalty. This Roth IRA distribution would be reported on Form 8606, with the 32k being entered on line 22.
I would not bother to amend the 2022 1040 over this issue, but client should gather any documentation including any 401k statement that he has, or even his W-2 forms for the year in which the Roth 401k contributions were made. He should also keep the 5498 from his Roth IRA custodian showing the 37k rollover contribution in 2022. He can take the distribution now if he wishes, and perhaps he should contact the plan and ask for a copy of the 1099R for 2022 or could request a transcript from the IRS that would show the form.