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How Should I Report a Rollover Contribution

Last Updated March 28, 2012

Question: 

I received a Distribution of rollover eligible assets from my 401(k) plan and later rolled over the amount to my IRA. The rollover was completed within the 60-day period, including the amount that was withheld for taxes, which I made up from my regular savings. How should I report the transaction on my tax return?

Tip provided by Appleby Retirement Consulting Inc. Appleby Retirement Consulting Inc provides Consulting, Coaching and Content on IRAs and other retirement plans to Financial, Tax and Legal professionals.

Answer: 

Since the amount was rolled over within 60-days, it is not taxable. Therefore, you should report it on your tax form (Form 1040) as a non-taxable distribution. The gross distribution amount should be input on Line 16a* of Form 1040 or line 12a of Form 1040A. Input zero on line 16b/12b to indicate that none of the amount is taxable. You will receive a copy of IRS Form 1099-R from the payer, reporting the distribution. Be sure to provide a copy to your tax preparer and let him/her know that you rolled over the amount within 60-days. Your IRA custodian should provide you with a copy of IRS Form 5498, reflecting the rollover contribution.  Form 1099-R should be mailed to you by January 31 and Form 5498 by May 31 of the following year.  For instance, if the distribution and rollover occurred during last year, your 1099-R is required t be issued by January 31 of this year and your Form 5498 by May 31 of this year.

*Note: If the distribution was made from an IRA, the line number would be 15 instead of 16.

The amount withheld for income tax will either increase any tax refund for which you are eligible, or decrease any income tax amount you owe.
Caution: This response assumes that the amount is rollover eligible. Amounts that are not rollover eligible are required to be included in your income; and such amounts can create excess contributions to your IRA if rolled over.