If you moved money from one IRA to another, you'll still need to report the transaction on your federal tax return, even if the rollover isn't taxable. Reporting it correctly helps the IRS understand that the distribution was rolled over and shouldn't be taxed.
What Is an IRA Rollover?
An IRA rollover happens when retirement funds are moved from one eligible retirement account to another. There are two common types of rollovers:
- Direct rollover: The money moves directly from one financial institution to another.
- Indirect rollover: You receive the funds first and then deposit them into another eligible retirement account within 60 days.
Although many rollovers aren't taxable, they still must be reported on your tax return.
Report Your Rollover Using Form 1099-R
If you took a distribution from an IRA or other retirement account, you'll receive Form 1099-R from the financial institution that issued the funds.
Enter the information from your Form 1099-R exactly as it appears, even if you rolled over the entire distribution.
Important Boxes on Form 1099-R
- Box 1: Gross distribution (total amount distributed)
- Box 2a: Taxable amount
- Box 4: Federal income tax withheld
- Box 7: Distribution code (for example, Code G indicates a direct rollover)
If You Rolled Over the Entire Distribution
If federal or state taxes were withheld from the distribution, but you replaced those withheld funds with your own money so that the full amount was rolled over:
- Report the full distribution amount from Box 1.
- Enter $0 as the taxable amount, if applicable.
- Check the option indicating that all or part of the distribution was rolled over.
- Enter the total rollover amount.
- Report any federal or state tax withholding shown on the form.
This tells the IRS that the entire distribution was successfully rolled over and is not taxable.
If You Did Not Replace Withheld Taxes
If taxes were withheld and you rolled over only the amount you received, the withheld portion is generally considered a taxable distribution.
- Report the full distribution amount from Box 1.
- Report the amount that was not rolled over as taxable income.
- Check the option indicating that all or part of the distribution was rolled over.
- Enter the amount that was actually rolled over.
- Report any federal or state tax withholding shown on the form.
Only the portion not rolled over is generally taxable. If you're under age 59½, that amount may also be subject to an additional early distribution tax unless an exception applies.
How to Enter an IRA Rollover in the Program
Follow these steps to enter your Form 1099-R:
- Go to Federal.
- Select Income (Select my forms).
- Choose 1099-R, RRB, SSA.
- Select Add or Edit a 1099-R.
- Enter the information from your 1099-R while following the instructions above
- Check the box indicating you made a rollover and enter the amount that was rolled over when prompted.
- Review the taxable amount and any withholding reported on the form.
Important IRA Rollover Rules
Keep these rules in mind when completing your return:
- Generally, you can make only one indirect IRA-to-IRA rollover during any 12-month period.
- There is no limit on the number of eligible direct trustee-to-trustee transfers or direct rollovers.
- Indirect rollovers must generally be completed within 60 days to avoid taxes and potential penalties.
- Keep copies of your Form 1099-R and rollover documentation with your tax records in case the IRS requests verification.
Need to Report a Partial Rollover?
If only part of your distribution was rolled over, be sure to enter both the rollover amount and the taxable portion accurately. The program will use that information to calculate the correct taxable income and determine whether any additional tax may apply.
Why This Matters
Even when an IRA rollover isn't taxable, reporting it properly helps prevent IRS notices, delays, and confusion. Entering your Form 1099-R accurately ensures your return reflects the rollover correctly and that you're taxed only on any amount that wasn't rolled over.