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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14848
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have a client who received a 1099-R form disbursement from

Customer Question

I have a client who received a 1099-R form for a disbursement from her 401-K. The 1099-R indicates the gross distribution in box 1 was completely taxable in box 2. Monies were withheld in box 4 so my client only received the net amount. The 1099-R indicates the distribution was prematurely taken (Distribution code 2). My client was contacted and advised by the disbursing company to give them the information for the direct rollover. This did not happen so the net funds (gross amount less the withholding amount) were disbursed to my client. My client did, however, reinvest those funds (the entire gross amount) back into a qualified retirement account. Here is my question: How do I report this transaction in my tax software? The 1099-R indicates the funds are taxable and subject to a penalty. The IRS is in receipt of this same 1099-R form. How do I explain these funds were rolled over indirectly within the 60 day time limit. Is there a special form? Or do I simply attach the supporting documentation and an explanation to the tax return?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello

If your client made up the difference for the tax withheld and actually put in the full amount shown as distributed then you need to report the rollover.

Form 5498 reports various types of IRA contributions you make in a number of reporting boxes. Box 1 shows the amount you contributed to a traditional IRA; box 9 reports the amounts contributed to a Savings Incentive Match Plan for Employees (SIMPLE) IRA and box 10 covers the amounts you put into a Roth IRA.

Although a rollover or conversion of assets from one retirement plan into an IRA isn’t deductible, they are considered contributions and will be reported in boxes 2 and 3 of Form 5498.

The IRS requires the institution that maintains your IRA to use Form 5498 to report to you and the IRS any IRA contributions, rollovers from certain types of employer-sponsored retirement plans to IRAs (including direct rollovers).

Mark the distribution as a Rollover ("G" is the code) but only the actual amount that was put into the account.

I do not know your software.

You are required to click a positive rating if I am to be credited with the response.

Customer: replied 1 year ago.
Did you get my first response?
Expert:  Robin D. replied 1 year ago.

Can you not read my answer?

Expert:  Robin D. replied 1 year ago.

Here is a full copy again

If your client made up the difference for the tax withheld and actually put in the full amount shown as distributed then you need to report the rollover.

Form 5498 reports various types of IRA contributions you make in a number of reporting boxes. Box 1 shows the amount you contributed to a traditional IRA; box 9 reports the amounts contributed to a Savings Incentive Match Plan for Employees (SIMPLE) IRA and box 10 covers the amounts you put into a Roth IRA.

Although a rollover or conversion of assets from one retirement plan into an IRA isn’t deductible, they are considered contributions and will be reported in boxes 2 and 3 of Form 5498.

The IRS requires the institution that maintains your IRA to use Form 5498 to report to you and the IRS any IRA contributions, rollovers from certain types of employer-sponsored retirement plans to IRAs (including direct rollovers).

Mark the distribution as a Rollover ("G" is the code) but only the actual amount that was put into the account.

I do not know your software.

You are required to click a positive rating if I am to be credited with the response.

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