Advanced Underwriting Consultants

Question of the Day – April 1

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: My client rolled over a 403(b) account balance to an IRA in 2010.  She received a 1099-R Form from the old carrier, reporting the distribution and coding it as distribution code “G.”  What, if anything, does the client need to report on her tax return?

Answer: Distribution code G on Form 1099-R means

Direct rollover of a distribution (other than a designated Roth account distribution) to a qualified plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA.

The rollover must be reported on the taxpayer’s federal income tax return, even though none of it is taxable.

Here is what the IRS Instructions for Form 1040 say about reporting the rollover.  Use lines 16a and 16b to report a qualified rollover, including a direct rollover, from one employer’s plan to another or to an IRA or SEP on Form 1040.  The full company retirement plan distribution goes on line 16a. The taxable amount–zero for direct rollovers– then goes on line 16b. The word “rollover” should be written next to the amount.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.