457 to Roth IRA rollover tax question
OhioGuy
retirement plan) to Roth IRA direct rollover we made. As a quick overview,
we are doing a direct transfer of about $4,300 or so from my wife's Ohio
deferred compensation retirement plan into a Roth IRA each year. We will
need to do this for another 2 years before the full amount has been directly
rolled over to a Vanguard Roth IRA.
I just did a test run of filling out the form 1040 for this year. I
looked back at last year's reaturn, and noticed that the person who filled
everything out for us set this up on the 1040 under 15a and 15b. He wrote
the total under "IRA distributions", and then wrote the same total in 15b as
a taxable amount. I looked back at last year's forms 1099-R, and both of
them (the one from the Ohio plan, and the one from Vanguard) showed that no
Federal income tax was withheld. Since this money was going from a plan
where it was put in tax free to one where you pay the tax up front, but
never again (Roth), I just assumed that this was right, and that the
distribution, though the $ never went to us, was correctly entered as an
addition of roughly $4,000 to our income that year.
However, now that I'm looking at it, I'm wondering if it should have been
put under 16a & 16b instead? It wasn't an IRA direct rollover/distribution,
it was an Ohio Deferred Compensation retirement plan. (457 plan) Thus,
since the money didn't originate with an IRA, I don't really think it should
have been entered as an IRA distribution on the tax form. Am I right or
wrong here?
I also noticed that this year there is a discrepancy that could affect a
lot of things on my 1040 tax form. Just like last year, I got 2 1099-R
forms - 1 from the Ohio Deferred Compensation group (where it originated)
and 1 from Vanguard. (where it ended up) Unlike last year, however, the two
don't agree.
The Ohio Deferred 1099-R form shows Gross Distribution of $4,325, while
the Vanguard 1099-R form shows a Gross Distribution of $4,333.50 instead.
(box 1) The former shows a taxable amount of zero, while the latter shows a
taxable amount of $4,333.50. (box 2a) The biggest difference, however, is
in box 4. In the former, it shows Federal Income Tax withheld of zero,
while the Vanguard form shows $433.35 withheld.
I'm not sure what to make of these discrepancies. One form from where the
$ ended up seems to show that 10% was already withheld in taxes. However,
the originating form seems to say that nothing was withheld. I'm not sure
which one to include with my form 1040. Obviously I don't want to be double
taxed if they have already withheld the $.
I'm fully expecting to get a runaround if we contact both parties, with
each blaming the other. Can anyone shed some light on how this sort of
discrepancy might occur? I'm pretty sure tax is indeed owed on this
transfer, though it was direct and we never got a check or anything. Now I
just want to make sure that I don't end up paying the tax twice, if it has
already been collected.
Thanks!