Individual 401K advice
I am hoping that the community has someone that can help me connect the dots on our individual 401k tax filing.
Situation: DH has a solo 401k for his profitable side-business (an LLC), there are traditional and roth accounts. He has transferred money from an old workplace 401k into this plan, traditional money only. Then, in 2020, he has converted the balance in the traditional account to the Roth account. The custodian (ETrade) produced a 1099-R that indicated the distribution amount as expected, but the taxable amount was 0, the “taxable amount not determined“ box was not checked, and the code was G (direct rollover to a qualified plan.) Now, there was no already-taxed money in the traditional account so I expected the entire amount to be in the taxable amount.
The call to ETrade was disappointing but not unexpected. The form will not be changed. “This is the way we handle Individual 401k because they are so flexible. We let you, the plan administrator, make decisions and document them.” Obviously, I know that this is taxable and I have paid the estimated taxes on this conversion, but the ETrade 1099-R doesn’t indicate a taxable event. Input the form differently than received or find a different way to communicate the taxable event to the IRS with my 2020 taxes?
The call with ETrade made me think more about setting up this plan. I must have made some incorrect assumptions about the administration (gross understatement) but I’m ready to clean up my mess.
So, are there any individual 401k plan-administrator’s on this board that can offer their experience so that I can have some confidence in communicating the correct information to the IRS, and getting back on the right path?
Thanks in advance,