Total balance direct rollover from 457B at one institution to a new Roth IRA at 2nd institution

Chancy

Situation: Total balance direct rollover transfer from a 457B to a Roth IRA - different institutions

The 457B custodian issued a 1099R with box 2 (taxable amt) $0 and box 7 code "G". I assume they didn't know what type of acct the balance was being xfer to at new custodian. I entered the 1099R as it appears, answered "no" to question:

Is this 1099-R a rollover from a 401(k), 403(b), or governmental 457(b) plan to a designated Roth 401(k), 403(b), or 457(b) plan?

answered "yes" to question:

Did you roll over this distribution to a Roth IRA?

The software is not including amount as taxable, and clearly it is. Am I entering something incorrectly? Should I enter the 1099R box 2 as box 1 amount even though it reads $0?

Austyn

Hello Chancy,

Since this is a conversion to a Roth IRA, you need to manually correct Box 2a to reflect the taxable amount. Here's what to do:

Go back and edit your 1099-R entry:
- Change Box 2a (Taxable Amount) from $0 to match the amount shown in Box 1 (assuming your entire 457(b) balance was pre-tax contributions)
- Keep everything else as it appears on the form
- Continue answering "no" to the first question and "yes" to "Did you roll over this distribution to a Roth IRA?"

This will ensure the conversion amount is properly included in your taxable income on Line 5b of your Form 1040.

However, if you made contributions to your pension plan or annuity using after-tax dollars, then part of your pension distribution will not be taxable. If that is the case, you will need to calculate the taxable amount using the Simplified Method Worksheet from the IRS Form 1040 instructions.

Chancy

understood. Thank you!