How to do federal income tax when I transfered money from my 401K to a Rollover IRA account? Please help. Thx!

Question

In 2006, I transfered money from my employer sponsor 401K directly into my Rollover IRA account. They sent me a 1099-R form for the distribution although this money is tax exemption. How am I going to report this 1099-R in my income tax? Thanks for your help! Le Nghp

Answer 1

if you rolled this money over within 60 days of your distribution, then there are no tax consequences.  you would report the gross distribution on Form 1040, line 16a.  The taxable amount would be 0 on line 16b.

Answer 2

The others have told you how to fill out the form...follow their advice.  Don't worry about the fact that a 1099-R was sent.  Take a look at the 1099-R.  Box 1 has a number in it...that's the gross distribution.  That's the line that you report on line 16a.  But Box 2 has a zero in it....that's what got reported to the IRS as being taxable.  So, the IRS knows it's not a taxable event.  They just want you to confirm it on your 1099-R and the IRA company to confirm it on THEIR tax reporting so the entire transaction trail is completed.

Answer 3

You report the total amount that was taken out on line 16a of 1040.  Then put zero on line 16b if it was all rolled over, and write "rollover" next to it.  If you are using tax software it should handle rollovers, they are very common.

Answer 4

On a direct rollover Agent to Agent and not to you..you don't have to report or do anything. If the check was made to you and you gave it to another investor...you are screwed. You will be sent information like a 1099 and you will pay your tax rate as regular income.