Reporting rollover from IRA to 401k on U.S. Taxes
May 11, 2009 11:30 AM Subscribe
US Tax Filter: How do I report an asset transfer/rollover from an IRA into a 401k to the IRS so that we are not taxed for the amount? I know you are not my tax advisor.
posted by anonymous to Work & Money (6 answers total)
I do the taxes for for myself and my husband. In 2007, he neglected to give me a tax form and I filed our taxes incorrectly as a result. The IRS just sent me a letter, and I have 3 weeks to figure this out and fill out a 1040x for that year. I would like to do this myself if at all possible.
My husband had a 401k from a previous job that he wanted to roll into the 401k at his current employer. The previous one never did very well and the current one was making money. In addition, it was a fairly small amount, just under $15,000, and we were afraid we would lose track of it throughout the years. By the time he was able to get to this, the previous company had been sold, and this 401k was converted to a simple IRA. In retrospect, I realize he should have left the money in this IRA, but the momentum was already there to get this into his current employer's plan. In 2007, he got a check from the administrators of the IRA, and wrote a check for the same amount to his current retirement plan. He had about an inch of paperwork related to this, and feeling overwhelmed, he asked his HR department if there was anything else he needed to do, they said "no" and he stuck it all in the file cabinet. Taking tax advice from his employer's HR department is not a good thing, no? Especially since they didn't know they were giving out tax advice?
We got a letter Friday from the IRS saying that this was income we neglected to report, and that we owe back taxes and penalties of almost $7000. Digging around in our files, I found a 1099-R from AIG, the previous admin of the IRA, showing a gross distribution of the entire amount on line 1, and that the entire amount is taxable, per line 2a. He found a Confirmation of Asset Transfer/Rollover from Vanguard, the admin of his current 401k, for that same amount. How should I have reported this? I am assuming that we would not owe taxes on this since 401k assets are taxable when they are cashed out far in the future. However, I can't find anything on the IRS site or anywhere else reputable about how to report this. Apparently we are the only people in the world who have ever cashed out an IRA and put the money into a 401k.
Ultimately, what I would like to do is file a 1040x the way I should have filed the 1040 in 2007, then appeal the notice from the IRS and use a copy of the 1040x as documentation as to why we don't owe the taxes.
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