Do I Need to Report a 401(k) Rollover on Taxes?

Yes, you have to report a 401(k) rollover on your taxes, even when none of it is taxable. Your former plan files a Form 1099-R with the IRS showing the distribution, and if your return doesn’t show a matching entry, the IRS will treat the full amount as taxable income and send you a bill. Done correctly, reporting a 401(k) rollover on taxes takes three entries on your Form 1040, and the taxable amount is zero.

Where the Rollover Goes on Form 1040

For a 401(k) rolled into another employer plan or a traditional IRA, you use lines 5a and 5b of Form 1040. Put the gross distribution from Box 1 of your Form 1099-R on line 5a. Put the taxable portion on line 5b. For a complete, non-taxable rollover, line 5b is zero.¹ If you only rolled over part of the distribution, whatever you kept goes on line 5b.

Then check the rollover box on line 5c. That checkbox is what tells the IRS the money moved to another qualified account and shouldn’t be taxed.² Skip it and you’re almost guaranteed to receive a notice proposing tax on the full distribution.

If your rollover went into an IRA rather than another employer plan, the same numbers go on lines 4a and 4b, with the rollover box on line 4c.³

Reading Your Form 1099-R

Your old plan’s custodian sends Form 1099-R by January 31 of the year after the distribution.⁴ Four boxes matter for a rollover:

Box 1 shows the gross distribution — the total that left your old account.
Box 2a shows the taxable amount. For a direct rollover this should be zero. For an indirect rollover it may show the full amount, because the plan has no way of knowing whether you completed the rollover in time.
Box 4 shows federal tax withheld. It’s zero on a direct rollover and 20% of the gross on an indirect one.
Box 7 shows the distribution code. Code G means a direct rollover to an eligible retirement plan. Code H means a direct rollover from a designated Roth account to a Roth IRA. Codes 1 (early distribution) and 7 (normal distribution) appear on indirect rollovers.⁵

When Box 2a Shows the Full Amount

Don’t panic if Box 2a shows your entire distribution even though you completed a valid rollover. You correct this on Form 1040 itself by entering zero (or the un-rolled portion) on line 5b and checking the rollover box on line 5c. The IRS reconciles the 1099-R against your return and the receiving custodian’s report.

Form 5498 Arrives Later

Your new IRA custodian files Form 5498 with the IRS and sends you a copy. Box 2 shows the rollover contribution credited to your account.⁶ You don’t file Form 5498 with your return. Because IRA contributions can be made through April 15, the form doesn’t arrive until late May, after most people have already filed. That’s fine. The IRS matches the forms on its own schedule.

If you rolled into another 401(k) rather than an IRA, you won’t receive a Form 5498. The receiving plan tracks the contribution internally.

Indirect Rollovers Change What You Report

How the money moves determines your reporting. In a direct rollover (also called a trustee-to-trustee transfer), the check is made out to the new custodian, never to you. There’s no withholding and no time pressure, and Box 7 will show Code G.

An indirect rollover means the money comes to you first. Federal law requires the old plan to withhold 20% of the gross distribution for income taxes before writing your check.⁷ You then have 60 days to deposit the full gross amount into an eligible retirement plan.⁸

Here’s where the math bites. Suppose $50,000 leaves your old 401(k). The plan withholds $10,000 and sends you $40,000. To make the rollover fully non-taxable, you have to deposit $50,000 into the new account within 60 days, which means finding $10,000 elsewhere to replace what was withheld. Deposit only the $40,000 you received and the IRS treats the missing $10,000 as a taxable distribution. You’ll owe income tax on it at your ordinary rate. If you’re under 59½, you’ll also owe a 10% early withdrawal penalty on that $10,000.⁹

The $10,000 that was withheld does count as a tax payment on your return. You claim it from Box 4 of the 1099-R, and if your total tax liability is less than what was withheld, the excess comes back as part of your refund. The refund doesn’t arrive until after you file, though, which is why direct rollovers are almost always the better choice.

Missing the 60-Day Deadline

Missing the 60-day window on an indirect rollover normally makes the entire distribution taxable that year, plus the 10% early withdrawal penalty if you’re under 59½.¹⁰ The IRS does provide an escape route for people who missed the deadline through no fault of their own.

Under Revenue Procedure 2016-47, you can self-certify a late rollover without requesting a formal private letter ruling (which costs over $10,000). Approved reasons include a financial institution error, a check that was misplaced and never cashed, a serious illness or death in the family, severe damage to your home, incarceration, and postal error.¹¹

You send a written certification to the plan administrator or IRA trustee using the IRS model letter or something substantially similar, then complete the rollover within 30 days after the qualifying reason no longer prevents you from acting. Keep a copy. The IRS can review the certification on audit and reverse the rollover if you misrepresented the facts.¹¹ Self-certification isn’t a guaranteed waiver. It lets you report the contribution as a valid rollover unless the IRS says otherwise later.

Rolling a Traditional 401(k) Into a Roth IRA

Moving pre-tax 401(k) money into a Roth IRA is a conversion, and the entire converted amount counts as taxable income for the year. Those contributions were never taxed on the way in, and Roth accounts grow tax-free, so the IRS collects at the conversion point.

The 1099-R uses Code G in Box 7, the same code as a direct rollover to a traditional IRA. Box 2a will show the full taxable amount.⁵ You report the conversion using Form 8606, which calculates the taxable portion and feeds the number into Form 1040.¹²

The 10% early withdrawal penalty doesn’t apply to Roth conversions regardless of your age, because the money stays inside a retirement account.¹⁰ Each conversion does start its own five-year clock. If you withdraw the converted funds from the Roth IRA before five years have passed and you’re under 59½, the earnings portion of the withdrawal may be subject to taxes and penalties.

Roth 401(k) to Roth IRA

If your 401(k) has a designated Roth account (contributions you already paid tax on), rolling that money into a Roth IRA isn’t taxable. Your 1099-R shows Code H, which is specific to direct rollovers from a designated Roth account to a Roth IRA.⁵

You still report the distribution. Enter the gross amount on line 5a and zero on line 5b, then check the rollover box on line 5c. The five-year clock for qualified distributions from the Roth IRA may differ from your designated Roth account’s clock, depending on when you first contributed to each. Time in your Roth 401(k) doesn’t automatically carry over to the Roth IRA’s five-year period.¹³

1
Internal Revenue Service. Publication 575 – Pension and Annuity Income (2025)
2
Internal Revenue Service. Publication 590-A – Contributions to Individual Retirement Arrangements (2025)
3
Internal Revenue Service. Instructions for Form 1040 (2025)
4
Internal Revenue Service. General Instructions for Certain Information Returns (2025)
5
Internal Revenue Service. Instructions for Forms 1099-R and 5498 (2025)
6
Internal Revenue Service. Form 5498 – IRA Contribution Information (2025)
7
U.S. Government Publishing Office. 26 USC 3405 – Special Rules for Pensions, Annuities, and Certain Other Deferred Income
8
Office of the Law Revision Counsel. 26 USC 402 – Taxability of Beneficiary of Employees Trust
9
Internal Revenue Service. Topic No. 558 – Additional Tax on Early Distributions From Retirement Plans Other Than IRAs
10
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
11
Internal Revenue Service. Rev. Proc. 2016-47 – Waiver of 60-Day Rollover Requirement
12
Internal Revenue Service. About Form 8606 – Nondeductible IRAs
13
Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts