Distribution code for Traditional 401k transferred to a ROTH IRA
Hello,
Thank you for your time in advance.
I have a client who received a 1099 for his rollover from his 401K.
It was a rollover from traditional 401k to a roth ira.
The 401K custodian coded as “G” with a taxable amount of the full transfer. but the client’s CPA insists that code “G” should NOT generate taxable event, therefore the code should be H or 2.
Any idea which one it should be?
Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2021-02-17 15:50
The CPA is incorrect. G is the correct code for this “qualified rollover contribution”. Code H applies when the distribution is from a Roth 401k account, and code 2 is for a penalty exempt distribution other than a direct rollover. His tax program should generate taxable income, but no penalty. Was there also a partial rollover from the 401k to a TIRA that was combined on the same 1099R? That can create issues with certain tax programs.
Permalink Submitted by Keith Kim on Wed, 2021-02-17 17:34
Thank you. it was requested to be traditional 401 to a Roth IRA in full. No partial distributions.