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401k and Taxes mixup

Old 02-20-2012, 01:40 PM
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401k and Taxes mixup

My wife had money in her 401k from a previous job. Last year (2011) she rolled the money into a personal 401k account.

While doing taxes we found out the previous employer filled out the paperwork where it kind of looks like my wife was given a check for her money instead of it being rolled over into the new account. Which means the gov counts it as taxable income, when it wasn't.

I can make calls to check up on it today (Pres Day), but how easy of a fix do you think this is?
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Old 02-20-2012, 01:45 PM
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Re: 401k and Taxes mixup

Originally Posted by jawzforlife View Post
My wife had money in her 401k from a previous job. Last year (2011) she rolled the money into a personal 401k account.

While doing taxes we found out the previous employer filled out the paperwork where it kind of looks like my wife was given a check for her money instead of it being rolled over into the new account. Which means the gov counts it as taxable income, when it wasn't.

I can make calls to check up on it today (Pres Day), but how easy of a fix do you think this is?
I think I received a form 1099 from the fund I rolled my 401k from a former employer into early this year showing the amount was nontaxable.. I'm not sure how this works with a 'personal account'.

Last edited by dtp; 02-20-2012 at 02:04 PM.
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Old 02-20-2012, 01:51 PM
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Re: 401k and Taxes mixup

First, just to make sure you are correct check the 1099, Box 1 of the form shows the total amount of your retirement fund that was distributed. The more important amount to you right now is in box 2a, the taxable amount. For direct rollovers from one qualified plan to another, that amount is generally zero.
Also check box 7, the distribution code. A letter or number should be here, explaining to the IRS exactly why your retirement money was taken out and just what was done with it. Direct rollovers to another qualified plan are coded with the letter "G." This includes transfers to another company's 401(k) plan, a tax-sheltered 403(b) annuity, a government 457(b) plan or an IRA.
The code lets the IRS know that the money was never in your hands, an important point when it comes to taxes on transferred retirement funds. If you had taken the money out yourself, taxes would have been withheld.

Another important thing is who the check was made out to, it should of been made out to the new 401k company, if it was made out to your wife you may be screwed.


As far as getting it fixed, that shouldnt be to hard (if the check was made out to the company and not your wife). They would just need to make some corrections on their side and issue a new 1099.


I have help a few ppl here deal with their past 401k companies, when rolling over to ours. A lot of places just try to pass the ball, if you get that type of situation ask to talk to a manager right away.
You can also let them know you are in contact with the IRS over the situation and ask if they need the IRS to call and talk to them or send them a letter, this should get their butts moving!

EDIT, even if the check was made out to your wife, if she requested a rollover you should be able to get everything fixed, but you might have to prove she asked for a rollover.

Last edited by 93transam1234; 02-20-2012 at 02:06 PM.
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Old 02-20-2012, 02:28 PM
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Re: 401k and Taxes mixup

Our current "financial guy" is the one who set up the transfer from the old account to the new account.

If the paper work was fill out incorrectly by the old employer, is it something "our guy" can can handle, or do I need to step in and do something?
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Old 02-20-2012, 02:32 PM
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Re: 401k and Taxes mixup

Originally Posted by 93transam1234 View Post
First, just to make sure you are correct check the 1099, Box 1 of the form shows the total amount of your retirement fund that was distributed. The more important amount to you right now is in box 2a, the taxable amount. For direct rollovers from one qualified plan to another, that amount is generally zero.
Also check box 7, the distribution code. A letter or number should be here, explaining to the IRS exactly why your retirement money was taken out and just what was done with it. Direct rollovers to another qualified plan are coded with the letter "G." This includes transfers to another company's 401(k) plan, a tax-sheltered 403(b) annuity, a government 457(b) plan or an IRA.
The code lets the IRS know that the money was never in your hands, an important point when it comes to taxes on transferred retirement funds. If you had taken the money out yourself, taxes would have been withheld.

Another important thing is who the check was made out to, it should of been made out to the new 401k company, if it was made out to your wife you may be screwed.


As far as getting it fixed, that shouldnt be to hard (if the check was made out to the company and not your wife). They would just need to make some corrections on their side and issue a new 1099.


I have help a few ppl here deal with their past 401k companies, when rolling over to ours. A lot of places just try to pass the ball, if you get that type of situation ask to talk to a manager right away.
You can also let them know you are in contact with the IRS over the situation and ask if they need the IRS to call and talk to them or send them a letter, this should get their butts moving!

EDIT, even if the check was made out to your wife, if she requested a rollover you should be able to get everything fixed, but you might have to prove she asked for a rollover.
I don't have the sheet in front of me, but sounds like it looks like this:

first box = is the $ amount
second box "taxable amount" = same as first box, but should be blank or zero
box 7 - G
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Old 02-20-2012, 02:38 PM
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Re: 401k and Taxes mixup

Even if the 1099 you got was issued to your wife, you can document the same amount was used and invested into the new 401k, this shouldn't be that hard for a tax guy.
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Old 02-20-2012, 02:43 PM
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Re: 401k and Taxes mixup

Originally Posted by 97FormulaWS-6 View Post
Even if the 1099 you got was issued to your wife, you can document the same amount was used and invested into the new 401k, this shouldn't be that hard for a tax guy.
well my "tax guy" is my mother.
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Old 02-20-2012, 02:47 PM
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Re: 401k and Taxes mixup

Originally Posted by jawzforlife View Post
well my "tax guy" is my mother.
D'oh! my bad.

I know when I did my taxes on turbotax; there was a 1099 from a 401k I cashed out; there was another section for personal deposits into a 401k. So even if you have the 1 1099 from the withdrawl, you should be able to say that you re-deposited that $$ into another 401k account and not have any issues.
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Old 02-20-2012, 02:50 PM
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Re: 401k and Taxes mixup

Originally Posted by jawzforlife View Post
Our current "financial guy" is the one who set up the transfer from the old account to the new account.

If the paper work was fill out incorrectly by the old employer, is it something "our guy" can can handle, or do I need to step in and do something?
I would step in. Get a copy of the paperwork what was sent i to the old 401k company.
If the paperwork was done wrong, then you might want to call the IRS (stay on hold for 10 hours) and ask them what to do/how to report it.

I know how the 401k should be done, and the laws regarding it, but as far as filing the taxes i have very little knowledge
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