D-38
Form 1099-R Rollovers and Disability Under
Minimum Retirement Age
*Minimum retirement age generally is the age at which you can rst receive a pension or annuity if you aren’t disabled.
Ask the taxpayer for the minimum retirement age. It may dier between employers.
Internal Revenue Code 402(c). Extended rollover period for plan loan oset amounts. Provides that the period during
which a qualied plan loan oset amount may be contributed to an eligible retirement plan as a rollover contribution is
extended from 60 days after the date of the oset to the due date (including extensions) for ling the Federal income tax
return for the taxable year in which the plan loan oset occurs, that is, the taxable year in which the amount is treated as
distributed from the plan.
Rollovers
• A taxpayer should not receive a Form 1099-R for a trustee-to-trustee transfer from one IRA to another, but should
receive a Form 1099-R for a trustee-to-trustee direct rollover from an employer qualied plan to an IRA with code G.
• A rollover that involves a distribution of funds to the participant isn’t taxable if the funds are deposited into an IRA (or
the same IRA) or an employer plan within 60 days. Form 1099-R will have either a code 1 or code 7. Subtract the
rollover amount from the gross distribution (Box 1) and enter the dierence as the taxable amount in Box 2a.
• A participant is allowed only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless
of the number of IRAs owned. However, you can continue to make unlimited trustee-to-trustee transfers between IRAs
because it is not considered a rollover.
• Sometimes a distribution includes both a regular distribution (generally taxable) and a rollover (generally nontaxable).
The Form 1099-R Rollover or Disability section is used to input the amount that won’t be taxed and Box 2a needs to
be adjusted.
• If taxpayer inadvertently missed the 60-day rollover deadline for one of several reasons, they can submit a certication
to the trustee, and the amount can be considered a rollover on his tax return. See Revenue Procedure 2016-47 for
details.
Note: The above applies to pre-tax accounts (e.g. traditional IRAs) and to post-tax accounts (e.g. Roth IRAs) within each
group. If rolling or converting from pre-tax to post-tax, the amount will generally be taxable.
If any portion was rolled over, check to bring up screen to enter the amount. Even if Box 7 is
Code G, this entry must be made.
Check if Code 3 is in Box 7 and the taxpayer is disabled and under the minimum retirement age*
of the employer’s plan. This will reclassify the disability income as wages on Form 1040. It will be
considered earned income in the calculation of some credits. Note: There is no cost recovery of
employee contributions prior to minimum retirement age.
Enter the dierence
between the gross
distribution (Box 1) and
the rollover amount as
the taxable distribution
in Box 2a.
