Incorrect 1099-r on 401k to Roth 401k transfer

Submitted by brian polen on Sat, 2021-01-30 01:00

Last year I converted 14,921 from my 401k to a Roth 401k. I fully understood that I would have tax implications on the converted amount. Fast forward to today and I received what I believe is an incorrect 1099-r. Here is the relevant information:

Box 1 (Gross Distribution): $14,921
Box 2a (Taxable amount): $14,921
Box 2b (Taxable amount not determined): Not checked
Box 2b (Total distribution): Checked
Box 3 (Capital gain): $0
Box 4 (Federal income tax withheld): $0
Box 5 (Employee contributions): $0
Box 7 (Distribution code): G
Box 7 (IRA/SEP/SIMPLE): Not checked

I called the servicing plan and they claim that this is indeed correct but when entered into my tax planning software it is treating the conversion as a non-taxable event. Thoughts?

Thanks.
Brian

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Permalink Submitted by David Mertz on Sat, 2021-01-30 01:57

This Form 1099-R correctly reports this In-plan Roth Rollover, so the plan is correct in not changing the Form 1099-R. If the tax software is treating it as nontaxable, I suggest asking why on the support forum for the tax software.

Permalink Submitted by Alan - IRA critic on Sat, 2021-01-30 02:15

The 1099R indicates that the IRR (in plan Roth rollover) came from the pre tax portion of the 401k, not from non Roth after tax contributions. If correct, the IRR should be taxable as you expected and this seems to point to an entry error on your part. Please review the entries you made, particularly 2a.

Permalink Submitted by brian polen on Sat, 2021-01-30 18:45

I did run my taxes through another another online tool and they did reognize that it was indeed a Roth 401k conversion and handled the tax properly. So apparently it is most likely the issue is with the software. I have an open ticket with them so we will see what happens. Thanks.