1099-R confusion.

[Out-to-Lunch]

Should I have gotten a 1099-R indicating a rollover from a 457(g) to a tIRA?

Backstory: My wife and I had money in identical 457(g) deferred compensation plans. We had most of our investments in 403(b) plans, but each had ~$215k in the 457 accounts upon early retirement last year. We had access to all of these accounts upon retirement.

My wife and I took slightly different paths. I took a taxable "test distribution" of $500 from the 457(g) and the 403(b), just to make sure the early-retirement spigot worked. My DW did NOT make a test withdrawal, because by then we had certainty that we could access the larger 403(b) accounts. We each then rolled over the balance of our 457 to a tIRA (fully aware that we would no longer have access to these funds until 59.5).

This may or my not be relevant to my question below: My rollover was done by sending me a check (payable to Vanguard, FBO me), which I deposited into the VG tIRA. When my DW went to do the same, they told her that she had to fill out a different set of paperwork, and they did a direct, custodian-to-custodian transfer to VG. Not sure why the difference.

Now we are in 1099-R times. I got a 1099-R showing only my taxable $500 distribution. My DW got a 1099-R from the same company showing a ~$215k distribution, non-taxable.

I called them to ask why *I* didn’t get a 1099 with the large, nontaxable rollover distribution, and the rep said it was because that wasn’t a taxable event. But, obviously, neither was my DW’s large distribution.

Does anyone know if I need (or should have) the large distribution on my 1099-R?

Thanks!

 

[kgtest]

Should I have gotten a 1099-R indicating a rollover from a 457(g) to a tIRA?



Backstory: My wife and I had money in identical 457(g) deferred compensation plans. We had most of our investments in 403(b) plans, but each had ~$215k in the 457 accounts upon early retirement last year. We had access to all of these accounts upon retirement.



My wife and I took slightly different paths. I took a taxable "test distribution" of $500 from the 457(g) and the 403(b), just to make sure the early-retirement spigot worked. My DW did NOT make a test withdrawal, because by then we had certainty that we could access the larger 403(b) accounts. We each then rolled over the balance of our 457 to a tIRA (fully aware that we would no longer have access to these funds until 59.5).



This may or my not be relevant to my question below: My rollover was done by sending me a check (payable to Vanguard, FBO me), which I deposited into the VG tIRA. When my DW went to do the same, they told her that she had to fill out a different set of paperwork, and they did a direct, custodian-to-custodian transfer to VG. Not sure why the difference.



Now we are in 1099-R times. I got a 1099-R showing only my taxable $500 distribution. My DW got a 1099-R from the same company showing a ~$215k distribution, non-taxable.



I called them to ask why *I* didn’t get a 1099 with the large, nontaxable rollover distribution, and the rep said it was because that wasn’t a taxable event. But, obviously, neither was my DW’s large distribution.



Does anyone know if I need (or should have) the large distribution on my 1099-R?



Thanks!

I feel like they should have but understand that in some non taxable distribution situations they don't. If it were taxable they absolutely would have. This happened to me with one of my rollovers.

 

[jazz4cash]

Well, there is taxable and there is reportable. I believe direct transfers between IRA's are not reportable or taxable whereas direct transfers between workplace accounts and IRA's are reportable but not taxable.

IRS has an interactive Q&A dialogue to determine if a transaction is reportable or not.

https://www.irs.gov/help/ita/do-i-n...of-an-ira-or-retirement-plan-on-my-tax-return

 

[Out-to-Lunch]

Well, there is taxable and there is reportable. I believe direct transfers between IRA's are not reportable or taxable whereas direct transfers between workplace accounts and IRA's are reportable but not taxable.

IRS has an interactive Q&A dialogue to determine if a transaction is reportable or not.

https://www.irs.gov/help/ita/do-i-n...of-an-ira-or-retirement-plan-on-my-tax-return

Thank you! That was very helpful.

According to that Q&A thingy, I am supposed to report it, just as you said. Hmm... I guess I will follow the directions on this page: https://www.irs.gov/taxtopics/tc154

 

[target2019]

What are the box 7 codes?

 

[Out-to-Lunch]

What are the box 7 codes?

For my 1099-R (which, again, is only reporting my $500 taxable distribution), the Box 7 code is 2 ("Early distribution, exception applies").

For DW's 1099-R (which is reporting the direct rollover to a tIRA of ~$215k), the Box 7 code is G ("Direct rollover of a distribution to ... an IRA").

Mine has Box 1 of $500 and Box 2 of $500, whereas I think it should report Box 1 of $215,500 and Box 2 of $500, with codes 2 and G in Box 7.

DW's has Box 1 of ~$215k and Box 2 of $0.

Also, hers has the "Total Distribution" box checked in 2b, whereas mine is not checked.

 

[target2019]

In looking for information about your 457(g) I see that it doesn't appear on the IRS Rollover chart at https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

Not sure if that is important...

But I think you should get a 1099-R for this rollover. Can you log into the 457(g) site and look for tax documents?

If this happened to me I'd read more about substitute 1099-R while waiting for the institution to do their job.

 

[Out-to-Lunch]

In looking for information about your 457(g) I see that it doesn't appear on the IRS Rollover chart at https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

Not sure if that is important...

But I think you should get a 1099-R for this rollover. Can you log into the 457(g) site and look for tax documents?

If this happened to me I'd read more about substitute 1099-R while waiting for the institution to do their job.

That is because I am an idiot and wrote "457(g)" instead of "governmental 457(b)"! When I realized the error, it was too late to edit my post.

Thank you for corroborating my understanding. Yes, here is my plan (following the IRS's directions at the page linked above:

-Call the custodian back and hound them for a corrected 1099-R. (On my list for today.)
-Failing that, call the IRS to ask them to help.
-Failing that, file form 4852 with my tax return.

 

[cathy63]

That is because I am an idiot and wrote "457(g)" instead of "governmental 457(b)"! When I realized the error, it was too late to edit my post.

Thank you for corroborating my understanding. Yes, here is my plan (following the IRS's directions at the page linked above:

-Call the custodian back and hound them for a corrected 1099-R. (On my list for today.)
-Failing that, call the IRS to ask them to help.
-Failing that, file form 4852 with my tax return.

They can choose to issue two different 1099-Rs since the two distributions will have different box 7 codes. So you can also ask if they've issued a second one that you ddin't receive for some reason.

I don't think it really matters if you don't get one and don't report the rollover though. If they didn't issue one, then the IRS doesn't have one, and it's a non-taxable event, so it has no effect on the amount of tax owed or on the processing of your tax return. I'd be afraid that filing a substitute 1099/form 4852 would slow things down if you're expecting a refund.

The new custodian will send the IRS a 5498 in May showing that they received the money in a rollover. If the IRS sends you a letter then that asks for more info or tries to assess tax on the rollover, you can amend your return to include form 4852.

 

[Out-to-Lunch]

Thank you, cathy. I was secretly hoping that you would weigh in!

 

[Out-to-Lunch]

Update: They coded the ~$215k distribution as an "internal transfer," that is, as if I were moving the funds to another custodian associated with our retirement plan. Rather than as a rollover or external direct transfer to outside of our retirement plan, such as an IRA. (FWIW, Vanguard is NOT one of our custodians.)

They will look into recharacterizing it, but my representative was not hopeful...

 

[rk911]

Should I have gotten a 1099-R indicating a rollover from a 457(g) to a tIRA?

Backstory: My wife and I had money in identical 457(g) deferred compensation plans. We had most of our investments in 403(b) plans, but each had ~$215k in the 457 accounts upon early retirement last year. We had access to all of these accounts upon retirement.

My wife and I took slightly different paths. I took a taxable "test distribution" of $500 from the 457(g) and the 403(b), just to make sure the early-retirement spigot worked. My DW did NOT make a test withdrawal, because by then we had certainty that we could access the larger 403(b) accounts. We each then rolled over the balance of our 457 to a tIRA (fully aware that we would no longer have access to these funds until 59.5).

This may or my not be relevant to my question below: My rollover was done by sending me a check (payable to Vanguard, FBO me), which I deposited into the VG tIRA. When my DW went to do the same, they told her that she had to fill out a different set of paperwork, and they did a direct, custodian-to-custodian transfer to VG. Not sure why the difference.

Now we are in 1099-R times. I got a 1099-R showing only my taxable $500 distribution. My DW got a 1099-R from the same company showing a ~$215k distribution, non-taxable.

I called them to ask why *I* didn’t get a 1099 with the large, nontaxable rollover distribution, and the rep said it was because that wasn’t a taxable event. But, obviously, neither was my DW’s large distribution.

Does anyone know if I need (or should have) the large distribution on my 1099-R?

Thanks!

my wife inherited a 401k from her brother which she rolled over into a tIRA. just the other day we received a 1099-R for the full amount that was rolled over. but we also received a form 5498 that shows that amount as a rollover contribution. none of the rollover amount is considered income for tax purposes. she did receive an RMD and, of course, that had its own 1099-R and is taxable.