Don't Forget to Report Rollovers to IRS | Ed Slott and Company, LLC

Don't Forget to Report Rollovers to IRS

By Joe Cicchinelli, IRA Technical Expert
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A mistake that some IRA owners make when filing their federal income tax return is forgetting to report rollovers to the IRS. If you rolled over any retirement plan distribution in 2014, you must report the rollover on your federal income tax return (IRS Form 1040). This includes distributions from any IRA, such as a Traditional, Roth, SEP or SIMPLE IRA, that are payable to the IRA owner. It also includes all distributions from a company retirement plan, such as a profit sharing plan, 401(k), 403(b) or government 457 plan.

All retirement plan rollovers must be reported to the IRS on your federal income tax return, even if you don’t owe any taxes because you properly did a tax-free rollover of your entire retirement plan distribution amount. While you might logically think that there’s no point in reporting a tax-free rollover, the IRS requires it. And don’t think the IRS won’t know if you don’t report it. They will know because all retirement plan distributions are reported to the IRS (and you) using Forms 1099-R and 5498. The IRS usually doesn’t match up the 1099-Rs and 5498s and let you not report the rollover on your tax return. You’re still required to report the distribution and rollover on your return. The instructions to IRS Form 1040 will show you how to report a tax-free rollover.

If you don’t file your own taxes, but instead use a tax professional, such as a CPA, to file your taxes for you, remember to tell him or her about any rollovers you did last year. If you don’t give your tax preparer all the necessary information, chances are pretty good that your tax return will be filed incorrectly. It would be a silly error to get penalized from IRS for not reporting a tax-free rollover.



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