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TurboTax said 1099-R box1 cannot be zero, but it's not a distribution but a 100% rollover

Forum|Forum|1 year ago
April 3, 2025
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I received a 2024 1099-R for a 100% rollover from employer 401k Roth to another Roth IRA, with box 7 having code '1B', box 1 $0, box 2 $0, and box 5 $7k. During fed final review TurboTax reported error for this form, and kept saying this 1099-R box 1 cannot be $0, and must be at least $0.50. Could this be a bug in TurboTax, since this 1099-R is a 100% rollover, as indicated by box 7 code '1B', and box 1 and box 2 both $0.00. Appreciate any help. Thanks.

Best answer by dmertz

@DanaB27 , this seems to be a Form 1099-R that reports a distribution of unrecoverable basis in the Roth 401(k) because the value of the account rolled over to the Roth IRA (which was likely reported on a separate code H Form 1099-R) was below the contribution basis in the Roth 401(k) at the time of the rollover.

Prior to 2018 this $7,000 could have been claimed as a miscellaneous deduction subject to the 2%-of-AGI floor, but such deductions have been suspended for tax years 218 through 2025. One might consider adding this $7,000 to Roth IRA contribution basis, but I don't know if that is permitted. If that was permissible, one would think that this $7,000 would have been included along with the rest in box 5 of the code-H Form 1099-R, but it's also possible that it is reported separately to allow the individual to treat it either way (ignoring the fact that the deduction has been suspended).

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DanaB27

Form 1099-R instructions state: "For a direct rollover of a distribution from a designated Roth account to a Roth IRA, enter the amount rolled over in box 1 and 0 (zero) in box 2a. Use Code H in box 7."

Please see dmertz's answer.

[Edited 4/4/2025 | 4:50am PST]

@happydad88

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dmertzAnswer

@DanaB27 , this seems to be a Form 1099-R that reports a distribution of unrecoverable basis in the Roth 401(k) because the value of the account rolled over to the Roth IRA (which was likely reported on a separate code H Form 1099-R) was below the contribution basis in the Roth 401(k) at the time of the rollover.

Prior to 2018 this $7,000 could have been claimed as a miscellaneous deduction subject to the 2%-of-AGI floor, but such deductions have been suspended for tax years 218 through 2025. One might consider adding this $7,000 to Roth IRA contribution basis, but I don't know if that is permitted. If that was permissible, one would think that this $7,000 would have been included along with the rest in box 5 of the code-H Form 1099-R, but it's also possible that it is reported separately to allow the individual to treat it either way (ignoring the fact that the deduction has been suspended).