I got an IRS letter that states my return does not match the records they have from others. In particular, it shows I reported $0 but they were reported a non-zero amount for taxable retirement income from a rollover IRA. However, in my case, this income is not taxable because I directly rolled it over to my new employer's 401(k). It is listed on my 1040 on line 15a of 2010 1040 with a left column note (put there by TurboTax) that states: "Rollover".

What has gone wrong? Is it that the target of the rollover did not report receiving the funds or that the sender did not properly report it was a direct rollover?

  • When was the rollover? Is it Possible that the money was sent by the first one in late December but arrived at the other one in early January? – mhoran_psprep Aug 18 '12 at 15:50
  • @mhoran_psprep why would that matter? Direct rollover is a transfer between the custodians, its not going through the taxpayers bank account (that's why its called direct) – littleadv Aug 18 '12 at 23:25
  • This is a records match question. If company A sent it on Friday December 30th 2011, it might not get processed until Tuesday January 3rd 2012. Therefore 2 different tax years. The new company wouldn't tell the IRS until January 2013. – mhoran_psprep Aug 18 '12 at 23:29
  • doubt its relevant. Deposits are not reported to the IRS by the new company. – littleadv Aug 19 '12 at 0:05

Talk to the TurboTax support. Generally, I've heard of several similar reports this year where people with 1099-R that had "G" marked properly got similar notices (direct rollover), and it appears to be a glitch in the IRS programming. If this is the case for you, then a simple response explaining that you reported correctly and attaching the copies of the appropriate forms would suffice.

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