mistakenly requested a distribution from 401K

[Franklin]

A few months back I was trolling around on my Merrill Lynch account site and hit the wrong button. This began a redemption from one of my 401K accounts. Realizing my error I called and rep and they reversed the transaction by putting the monies back ($8,000) within a day. They did mentioned that I might get a 1099-R but not to worry as it had been returned. So....yesterday I got a 1099-R for $8K. The form says I had 60 days to return the funds to my IRA (which I did).However it did state that I should talk to my tax professional (in process). The 1099-R has a code Q and indicated taxable amount not determined. I am hoping this is not reported as income in anyway. Has anyone ever had this situation.? I feel so stupid if this alters my 2024 taxes.

 

[Koolau]

A few months back I was trolling around on my Merrill Lynch account site and hit the wrong button. This began a redemption from one of my 401K accounts. Realizing my error I called and rep and they reversed the transaction by putting the monies back ($8,000) within a day. They did mentioned that I might get a 1099-R but not to worry as it had been returned. So....yesterday I got a 1099-R for $8K. The form says I had 60 days to return the funds to my IRA (which I did).However it did state that I should talk to my tax professional (in process). The 1099-R has a code Q and indicated taxable amount not determined. I am hoping this is not reported as income in anyway. Has anyone ever had this situation.? I feel so stupid if this alters my 2024 taxes.

If you use a tax professional to do your taxes, s/he can guide you. Otherwise, you can just keep all the documentation ready in case the IRS says you didn't pay tax on the $8K. If you file by mail, a note to the IRS would be in order. e-File? Not sure. I'm guessing someone more knowledgeable will chime in soon.

Don't think you are stupid. You made an error. You caught it and fixed it. I can tell you about stupid when it comes to investing. But I won't.

Relax.

 

[GrayHare]

I'd list it on the tax return as an $8000 withdrawal error followed by -$8000 noted as a correction. That way the 1099-R number shows up on your return.

 

[Sunset]

Maybe you will get another form showing the return of the $8K.

Either way, I'd report it and via the tax software claim that it was returned. Keep all paperwork.
Also get statement or activity of the account, to see the $8K go out / in, (or nothing happened). As IRS might ask you a few years from now, and then it's harder to find the info.

 

[ShokWaveRider]

I did the same thing with one of MYGAs in July 2024. I called them, they send me a form and it was reversed the following month. No Biggie.

 

[jazz4cash]

If you use tax software it should query if any of the distribution was rolled over to an <IRA> via 60 day rollover rule. I would reply 100% but it may be nuanced if it is coming out of a 401k and going back in. Also it is limited to once per 12 months (or maybe calendar year)

 

[RetiredAndLovingIt]

Is it a Roth IRA? Code Q is used for a qualified Roth IRA distribution which is not taxable or considered income.

 

[pjigar]

Is it a Roth IRA? Code Q is used for a qualified Roth IRA distribution which is not taxable or considered income.

^ This. Either way, this distribution will be not be taxable.

Legal language:
Only use Code Q, Qualified distribution from a Roth IRA, when the IRA owner has met the five-year waiting period and is either age 59½ or older, has died, or is disabled (assuming there is proof of the disability).

 

[cathy63]

Here's how TurboTax reports a Roth IRA distribution that was rolled over within 60 days.

The amount from box 1 goes on line 4a, $0 on 4b, and the word "ROLLOVER" next to 4b.

 

[Franklin]

all very helpful....thanks. I try to keep my return under the radar and not raise any flags. If it does I'll supply all the info.