I left my company last year and promptly rolled over all of my 401(k) *directly* to an IRA. I’ve done this several times before. I almost had a heart attack when I got a 1099 from them reporting 28% of it as a "Taxable amount". I surely intend to talk to them on Monday, but in the meantime I’m in a panic and would like to get opinions. The strange thing is that it’s not all taxable, even though I took one distribution. I could see it if they didn’t think I’d had rolled it over to a qualified retirement plan, but they obviously think I did, since it’s not all taxable. My dad thought he had run into this before and said some code on the W-2 indicates it’s non-taxable, but I don’t see anything on there, and why would it say "taxable" in black and white only to be reversed by a secret code on the W-2? So any theories on what happened? Could this be legit? Or is this just an administrative error?
I rolled it over directly (hence why I said *directly*), and the check was NOT made out to me. Otherwise, the whole distribution would have been taxable, which was my point. I was very careful about this.
Nope, no loan — good guess though.
I discovered a clever way to get an answer: I entered the 1099-R form into TurboTax to see what it would do. It showed no tax due. Now the question becomes, why, and if the amount on 2a is not the true taxable amount, what is it?
They determined it was an error. I am relieved. Thanks for your help.
I bet there’s 5 wrong answers above me, today!
You MUST get a 1099-R when monies leave a retirement account of any type.
My hunch is that there is an amount in box 1, a lesser or zero amount in box 2A and a code in Box 7. In the case of a rollover, Box 2A should be 0 and box 7 should be a G.
If you see an amount in 2A, and perhaps a 1 or 1A in Box 7, based on what little you’ve told above, I would think that you MAY have had a loan against your 401k at the time you left the employer.
If you DID have a loan outstanding, and you did not pay the loan back IN FULL upon termination, the short amount is TAXABLE INCOME and subject to not only tax, but the 10% penalty, to boot!
This is one of the big risks of 401k loans.
If you didn’t take out a loan, then I’d be hard-pressed to guess why there would be an amount in Box 2A.
EDIT: If there was no loan and 100% was rolled over, Box 2A should be ZERO and Box 7 = G. Anything else needs to be re-issued.