I don't do returns, and I haven't been able to find out the answer to this question. OP transferred money from one company's 401(k) to another company's 401(k), and he received a 1099-R. The instructions for the 1099-R give information on how the distribution is to be reported, but it doesn't cover this case.
My guess is that it's reported on Line 5a of the 1040, Pensions and annuities, but showing zero as the taxable amount.
Is this a reasonable approach? Or am I way off base? Is this a normal rollover? I thought a 401(k) could only be rolled over into an IRA.
If within 60 days of taking the distribution from the former company's 401(k), the entire distribution was rolled over to the new company's 401(k) , then I would expect a 1099-R, and I would expect 1099-R Box 2 to read zero and 1099-R Box 7 to have a "G" in it.
What does this 1099-R Box 7 have in it?
I agree 2022 Form 1040 Line 5b should show zero. I would expect Line 5a to show the amount of the rollover.
First, to address rollovers. Yes, it's permitted to transfer from one's old 401(k) to a new one.
It's possible the new 401(k) has very low expenses and the person would just rather have the one retirement account. I worked for a company whose plan had an S&P index for a .02% (i.e. 1% over 50 years) and index funds available to the public hadn't dropped that low yet.
Or. Person is in a high tax bracket, beyond the ability to deposit to an IRA and take a deduction. So, they'd use the back-door process. Deposit, with no deduction, and convert to Roth. This process is far simpler if there is no existing IRA, as that would require prorating the conversion and mixing in the pretax money from the transferred 401(k).
Or - for someone who might want to take a loan, the transfer to the new
401(k) makes sense. (I'm not taking a position on whether this is wise. I can probably contrive situations that go either way).
My tax return doesn't have 401(k) to 401(k) transfer, just 401(k) to IRA, as it's easier for me to transfer a chunk of money to the IRA, and then distribute as we spend over the year. 5a shows the full amount transferred. 5b shows only the amount we withdrew that did not go to the IRAs. It's zero most years. and the tax form shows "Rollover" typed in between "b Taxable amount" and the 5b line. I use tax software, which wrote that. I assume the instructions would have a paper return do the same.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.