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Posted by OhioGuy on February 6, 2008, 1:01 pm
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Today I started filling out my form 1040, and noticed 2 discrepancies in
the 1099-R forms we got. This year, we rolled over $4,325 directly from my
Ohio Deferred Compensation 457 retirement plan to a Vanguard Roth IRA.
Ohio 457 1099-R: Box 2a taxable amount: .00
Box 4 Fed. Income tax withheld: .00
Vanguard 1099-R: Box 2a: tax amt.$4,333.50
Box 4 Fed Inc. tax withheld: $433.35
The differences between the two forms makes it very difficult for me to
figure out how to report the rollover on my taxes. Is the taxable amount
zero, or $4,333.50? Has income tax been withheld already or not?
Obviously, I don't want to be double taxed if it has already been
withheld, nor do I want us to be bumped up into a higher tax bracket if the
taxes on this amount have already been paid by being withheld. However, I
can't find any place on the 1040 to designate that the withholding taxes
have already been paid, and I'm afraid that this sort of thing could easily
get us audited and delay our refund.
On the Form 1040, I realize that this stuff has to be entered in the 15a &
15b area, or perhaps 16a & 16b, since it wasn't an actual IRA distribution.
I'm a bit confused about which, but most confused about whether this amount
should be listed as taxable or not, and whether it should be added to our
taxable income for the year, if it has already had tax withheld up front.
Until I get an answer on this, I can't proceed any further in doing my
U.S. or state tax forms. I've done research online for several hours this
morning, but can't find anything that specifically addresses this issue.
I'm stuck - help please!
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Posted by Rich Carreiro on February 6, 2008, 1:49 pm
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> Today I started filling out my form 1040, and noticed 2 discrepancies in
> the 1099-R forms we got. This year, we rolled over $4,325 directly from my
> Ohio Deferred Compensation 457 retirement plan to a Vanguard Roth IRA.
No, you didn't do that, because it's only starting in 2008 that
you can directly roll/convert from a qualified plan to a Roth IRA.
What you actually did was roll from your 457 to a trad IRA, and then
convert that trad IRA to a Roth IRA.
So OH gives you a 1099-R with all zeros, because a rollover from
a qualified plan to a trad IRA is tax-free.
And Vanguard gives you a 1099-R with numbers, because a conversion
of a trad IRA to a Roth IRA is taxable.
I bet that if you look closely at the 1099-Rs, you'll see
that the OH one does NOT have the "IRA" box checked, but the
Vanguard one does.
>
> Ohio 457 1099-R: Box 2a taxable amount: .00
> Box 4 Fed. Income tax withheld: .00
>
> Vanguard 1099-R: Box 2a: tax amt.$4,333.50
> Box 4 Fed Inc. tax withheld: $433.35
It's $4333.50 instead of $4325.00 because during the time
the money sat in the temporary intermediate trad IRA, it must've
earned $8.50.
As for what's taxable, if you've never made any non-deductible
IRA contributions to any trad IRA account, the whole $4333.50
is taxable. If you've ever made any non-ded contributions, you'll
have to fill out Form 8606 to see how much of the $4333.50 is taxable.
The taxes withheld are reported on the taxes withheld line
of Form 1040 -- same line where federal income tax withheld
on your W-2 goes.
--
Rich Carreiro rlc-news@rlcarr.com
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Una on February 6, 2008, 7:38 pm
Please log in for more thread options >What you actually did was roll from your 457 to a trad IRA, and then
>convert that trad IRA to a Roth IRA.
Yup. The amount converted from trad IRA to Roth IRA you add to your
income, and the amount withheld you add to your other withheld taxes.
Both amounts are shown here:
>> Vanguard 1099-R: Box 2a: tax amt.$4,333.50
>> Box 4 Fed Inc. tax withheld: $433.35
Una
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by OhioGuy on February 7, 2008, 5:39 pm
Please log in for more thread options > Yup. The amount converted from trad IRA to Roth IRA you add to your
> income, and the amount withheld you add to your other withheld taxes.
> Both amounts are shown here:
>
>>> Vanguard 1099-R: Box 2a: tax amt.$4,333.50
>>> Box 4 Fed Inc. tax withheld: $433.35
Thanks folks! That's simplicity itself after having it explained to me.
This was very helpful - I didn't have to call Vanguard and wait on hold who
knows how long to 'hopefully' get a useful answer.
I was hoping, of course, that this wouldn't be counted as "income", since
we never got a check, and it just went from one retirement account to
another. However, it appears to bump us up a bit, artificially making our
income look higher. On the other hand, though, income tax was withheld, so
that part counts as tax already paid. In the end, hopefully both of these
balance out. Thanks again!
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Tom Russ on February 7, 2008, 5:37 pm
Please log in for more thread options OhioGuy wrote:
>
> Vanguard 1099-R: Box 2a: tax amt.$4,333.50
> Box 4 Fed Inc. tax withheld: $433.35
I suppose that there is also the question of what the source of funds
was for the Federal Income Tax withholding. If amount withheld was
money that originally came from the IRA and thus didn't end up in the
Roth IRA, does that make it a premature distribution subject to the
10% penalty?
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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