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Taxable amounts from 1099-R not included in Income - need help

mattg

I have a couple of 1099-Rs that clearly indicate a taxable amount, but this amount isn't included in the Income summary (so the tax calculated is also wrong). Please see details below. What am I missing?

One is for an in-service rollover within my employer 401(k) from Traditional to Roth which is a taxable event. I got a 1099-R for this with a taxable amount indicated in Box 2a, with Box 7 code G, and the 'Taxable amount not determined' box is not checked. My understanding is that the entire amount from Box 2a will be taxable. Yet, this is not included in the Income Summary.

The other one is for a pension 1099-R where again there is a taxable amount listed in Box 2a, with Box 7 code 2, and the 'Taxable amount not determined' box is not checked. Here too I would expect this entire Box 2a amount to be taxable.

In the Pension Distributions details, I see that the Total Pension Distributions is listed correctly, but most of it considered Nontaxable with no explanation as to why. There is an amount shown for Taxable Pension Distributions but it doesn't match the taxable amount from any of my 1099-Rs and there is no explanation about how this was calculated. There are no more details in the Federal return preview copy; it just shows the incorrect Taxable amount in 1040 line 5b.

Please help. I'm new to FreeTaxUSA, but except for this everything went very smoothly.

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Comments

Taylor

Hello mattg,

From what you are describing, the 401K may be a conversion instead of a rollover. If this is the case, you will need to report this in the screens that follow the 1099-R entry. If this applies to you, when it asks if this was a conversion, select "Yes." Another box will be provided for you to enter any post-tax contributions, if any, for this account.

If the codes were reported on the 1099-R incorrectly, the issuer will need to send corrected 1099-R forms. Codes 2, (2 - Early distribution, exception applies (under age 59 1/2) and G, (G - Direct rollover to a qualified plan).

Please also check with the plan to determine if the 401K plan was a Roth account. If it was a Roth 401K rollover to a Roth IRA account, this typically is not a taxable event.

Regarding the pension plan, if you have entered the taxable amount in line 2a inside the 1099-R screen, this will typically be reported as taxable and showing on the "Summary" screen inside the account on the Taxable Pension Distributions line. There is a blue word link on that line you can click to view the calculation for the entry.

If this entry is not reporting the amount expected, please reach out to our Customer Support team inside your account using the Support Center. They can look at this further with you and view how the other entries in the 1099-R screens may affect the taxable amount.

mattg

Thank you. This is indeed a conversion, and I followed your steps and it is now reported correctly.

I have summarized below what I did for anyone else who may have similar situations:

For in-plan conversion of pre-tax 401k amount to Roth 401k: Answer Yes to the 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?"
For rollover of after-tax amount from a qualified retirement plan to a Roth IRA: Answer Yes to the question "Did you convert part or all of this distribution to a Roth IRA?". Then for the question "Enter how much of this distribution of $XXXX you converted from a qualified retirement account to a Roth IRA", enter the amount rolled over to Roth IRA. Then answer Yes to the question "Have you ever made contributions to your pension plan using after-tax dollars?". Then for the question "Enter the amount of your basis in the $YYYY you converted from a qualified retirement account to a Roth IRA" enter the basis to be the same as the converted amount (so that it is not taxable).