Investment company is issuing 1099R for distribution processed from 401k plan w/ solely pre tax salary deferrals in the 401k account. Account is for terminated participant, who requested rollover to his Roth IRA of the entire amount.

My question is on the 1099 code. Unless I've missed something IRS instructions appear to be somewhat unclear. I found a reference to using code G in box 7 and reporting the taxable amount in box 2a (along of course w/ the distr amount in box 1). This seems to make sense to me however the investment company that is issuing the 1099 states that they will use a code GB.

The B is for distributions out of a Roth source 401k account (isn't it?). In the fact pattern above the money in the 401k plan is all pre tax.

If the B code is used that seems to me would indicate to IRS that there isn't a taxable event (eg the B seems to indicate that the money came out of a Roth, and since it is going into Roth IRA there s/n/b any tax since the original deposited source was post-tax). This would be an incorrect taxation result w/ my fact pattern.

Am I missing something? Anyone have experience w/ this fact pattern and if so what code(s) have you used? Thank you for any help.

From page 4 of the 1099-R instructions:

For a direct rollover of an eligible rollover distribution to a Roth IRA (other than from a designated Roth account), report the total amount rolled over in box 1, the taxable amount in box 2a, and any basis recovery amount in box 5. (See the instructions for box 5 on page 9.) Use Code G in box 7.

I agree - that's exactly the cite I read.

So any guesses as to why the suggestion of a code B to go along w/ it? That doesn't really seem right to me but I hate to second guess what a big investment house is doing (eg w/ presumably a large in house legal and tax staff) w/o some support for my thoughts.

Thanks for the response

Perhaps there is confusion with respect to the type of money, or perhaps there is just confusion in general.