I got a CP2000 from the IRS for 2016. It concerns three retirement account transactions.

  1. A direct rollover from an existing IRA to a Solo 401K (a qualified plan; 1099-R Code G in box 7)
  2. In 2016, I started to do a backdoor Roth and realized that I could not, so I had the funds returned. These also triggered a 1099-R, and I think the code was "81" or "82" (I don't have it in front of me).
  3. As #2, but for my wife.

It's not clear to me why the IRS thinks these would be taxable events. For #1, the code in Box 7 seems to answer any question they would have about the transaction. How do I further "prove" that this was a roll into a qualified plan?

For #2 and #3, I contributed post-tax dollars and had them returned. If the contributions and returned funds were pre-tax dollars, wouldn't I have had to claim a deduction for that contribution? Even if I had completed the backdoor Roth, it would have been with post-tax funds.

What will the IRS see as sufficient evidence as a response to incorrectly calling these distributions taxable?

  • 1
    Please edit Item 1. Did you roll over from an IRA to a Solo 401(k) and then to a different qualified plan (which suggests that the Solo 401k is not a qualified plan) or is the qualified plan the Solo 401(k) itself, i.e. there was only one rollover? – Dilip Sarwate Aug 30 '18 at 15:30

Your Answer

By clicking "Post Your Answer", you acknowledge that you have read our updated terms of service, privacy policy and cookie policy, and that your continued use of the website is subject to these policies.

Browse other questions tagged or ask your own question.