2017 1099-Rs & Form 5498

Submitted by Sue Moy on Sat, 2018-02-03 17:23

I did a rollover of my 401K funds, both taxable and non-taxable, the taxable to a traditional IRA and the non-taxable to a Roth IRA. A direct rollover was done with the receiving financial institution which occurred in December 2017. For the non-taxable funds, the administrator sent me a check directly and I had to send another check to the receiving financial institution within 60 days. I received the check in late December, needed to wait a week before I could draw on the funds and send it to the receiving institution on Jan 2, 2018 so the Roth IRA was not opened until 2018.

I have received 1099-Rs for the rollover to the traditional IRA and the after-tax 401K funds. I have a corresponding 2017 5498 form for the rollover funds that established the Traditional IRA, but not for the after-tax funds that went to the Roth IRA since it occurred in Jan 2018. Is this going to be an issue w/ the IRS? The 1099-R for the after-tax funds has a distribution code of 7 and none of it is taxable. How does the IRS know that the distribution of after-tax funds from my 401K were rolled into a Roth IRA?



Submitted by Alan - IRA critic on Sat, 2018-02-03 17:49

Because the Roth contribution was not completed until 2018, the 5498 reporting that rollover contribution will not be issued until May, 2019. Further, even though the 1099R and the “rollover” will be reported on your 2017 return (non taxable), for purposes of the 5 year holding periods for your Roth IRA, the contribution was not made in 2018 (consistent with the 5498). Since the 1099R for the after tax funds was non taxable, the IRS probably will not care whether you rolled it over or not, but since you will not report this on Form 8606, if you wanted to preempt any possible contact from the IRS, you should include an explanatory statement with your return indicating that the after tax amount was rolled to your Roth IRA, but not until 2018 as an indirect rollover. 

Submitted by Sue Moy on Sat, 2018-02-03 18:08

Thank you for your quick response – do you mean the 5498 for the Roth will not be issued until May 2018?  Do I need to fill form 8606 for the rollover of the 401K nontaxable funds to the TIRA?  Again, thank you so much for your assistance,Sue

Submitted by Alan - IRA critic on Sat, 2018-02-03 18:42

  • No, the 5498 will not be issued on the Roth contribution until May, 2019, one year later than the 5498 for the TIRA because the rollover funds were not deposited until this January, 2018.
  • The non taxable (after tax contributions in 401k) funds went to your Roth by indirect rollover and not by way of a TIRA. In that situation there is no 8606 filed. This indirect rollover is reported directly on line 16 of Form 1040 if you use a 1040. There will be nothing on 16b because this is not taxable.
  • For the direct rollover to your TIRA you should have a 1099R coded G in Box 7. This also gets reported on line 16 of Form 1040. Therefore, the total of both 1099R forms should go on 16a, nothing on 16b, and “rollover” entered on the line next to 16b. 

Submitted by Sue Moy on Sat, 2018-02-03 18:48

Alan,Again, thank you so much for your time and detailed advice.  I really appreciate it and this IRA Discussion Forum is so helpful!Sue

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