1099-R Box 5 Reporting On Roth with loss

[Lou S.]

We have an employee who rolled over their total balance to a ROTH-IRA. The account indulded a ROTH-401(k) potrtion where the total account value is less than the sum of the ROTH 401(k) contributions. Example Roth account at time of rollover $9,000 total Roth contributions $10,000. The instructions for form 1099-R indicate you list the basis in box 5 - the $10,000 but our 1099-R program gives us and error when box 5 is greater than box 1.

We think

Box 1 - $9,000 (amount rolled)

Box 2 - $0 since it was rolled

Box 5 - $10,000 (roth basis)

To me it seems obvious that the participant should carry over the $10,000 basis from the ROTH-401(k) but IRS guidence in 402(A) code & regs, such as it is doesn't apprear to address this situation.

Any thoughts? Since we have about an hour ledt to mail 1099-Rs I think we'll do them with the error and file an amended/corrected 1099-R if we have to.

[masteff]

A few days late but a bunch of us have been buried in snow...

1099-R instructions, page 9, "Losses".

Losses. If a distribution is a loss, do not enter a

negative amount in this box. For example, if stock is

distributed from a profit-sharing plan but the value is less

than the employee’s after-tax contributions or designated

Roth contributions, enter the value of the stock in box 1,

leave box 2a blank, and enter the employee’s

contributions or designated Roth contributions in box 5.

http://www.irs.gov/pub/irs-pdf/i1099r.pdf

Admitted, your scenario is predominately a rollover, but it sounds like you did exactly right.