401(k) rollover glossary
Form 1099-R
Form 1099-R is the tax form your old custodian sends you after a retirement distribution. Box 7 contains the distribution code — code G (direct rollover) means no tax; code 1 (early distribution) means a taxable event. Custodians frequently miscode rollovers.
Form 1099-R is issued by your retirement plan custodian whenever you take a distribution — including rollovers — from a 401(k), IRA, pension, or annuity. You receive it in January of the year following the distribution. The IRS receives the same form and uses it to verify that distributions are correctly reported on your tax return.
The most important field on a 1099-R is Box 7: Distribution Code. For a direct rollover from a Traditional 401(k), the code should be G. For a Roth 401(k) direct rollover, the code should be H. For a regular (non-rollover) early distribution, the code is 1. Code 2 applies to early distributions with a known exception. Code 7 is a normal distribution from an IRA at age 59½ or older.
Custodians regularly miscode rollovers. The most common error: a direct rollover is coded as '1' (early distribution) instead of 'G' (direct rollover). If you were under 59½, the IRS will calculate income tax plus 10% penalty on the full amount. This error often surfaces 12–18 months after the distribution as a CP2000 notice.
Box 2a shows the taxable amount. For a properly coded direct rollover, Box 2a should be $0 — because no taxable distribution occurred. If Box 2a shows a number and Box 7 shows G, there may still be a taxable portion (such as after-tax contributions that were not rolled over).
If your 1099-R is miscoded, request a corrected 1099-R from your custodian. Most custodians will issue a corrected form — this is the cleanest fix. If the custodian refuses or the issue is not resolved before tax filing, you can file a substitute Form 4852 with your tax return, explaining the discrepancy.
Related tools
Frequently asked questions
- My 1099-R shows code 1 but I did a direct rollover — what do I do?
- Contact your custodian immediately and request a corrected 1099-R with code G. Provide documentation of the rollover (confirmation letter, account statement showing the receiving account). If the corrected form isn't available before your tax deadline, file Form 4852 as a substitute. Do not report the distribution as income.
- When will I receive my 1099-R?
- Custodians are required to issue 1099-Rs by January 31 of the year following the distribution. If you rolled over in the current calendar year, you will receive the 1099-R in January of next year.
- If my rollover was coded correctly, do I still need to report it on my taxes?
- Yes, you must report the 1099-R on your tax return even if it is a non-taxable rollover. Report the gross distribution in the appropriate line and indicate it was rolled over. Using tax software, selecting 'rollover' in the 1099-R interview will populate this correctly. The taxable amount will be $0.
Related terms
This glossary entry provides educational information based on IRS rules. It is not tax or legal advice for your specific situation.