Tax forms can be confusing and scary. You will receive several documents over the next few weeks and the Mason team is here to help if you have questions or concerns. Remember, our planning strategies don’t typically result in large unanticipated tax consequences so please check with us if you’re worried that something has been reported or accounted for incorrectly.
A transfer from a non-employer retirement account (IRA or Roth IRA) from one institution to another (i.e. Fidelity IRA transfer to AXOS IRA) is a non-reportable transaction. Therefore, you will not receive a 1099-R reporting this type of transaction.
A “direct rollover” is the transfer of an employer retirement account (TSP, 401k, 403b, etc.) to an IRA or another employer retirement account. This transfer is recorded on Form 1099-R. Your tax preparer should pay close attention to box 7 of this form as it will contain a code “G” to indicate that this transfer is in fact a rollover and therefore non-taxable. The majority of the rollovers executed by Mason & Associates are direct rollovers. However, a handful of indirect transfers and rollovers are processed annually.
An “indirect rollover” is when your transfer is deposited into a personal account before being eventually deposited into an IRA or another employer retirement account. Form(s) 1099-R associated with indirect transfers will report the income as taxable. Since these rollovers may or may not be taxable, it is important to work together with your tax preparer to accurately report the transfer with the appropriate supporting documentation