The Internal Revenue Service allows people to move money between retirement accounts through a rollover. In a rollover, the money is paid to the account holder and, within 60 days, the account holder redeposits the money into another retirement account. Rollovers between the same type of IRAs are tax-free, but rollovers between traditional IRAs to Roth IRAs are taxable. When you complete a rollover, you will receive Form 1099-R that shows the taxable portion as well as the amount withheld.
Fill out Form 1040 or 1040A for your income tax return, not form 1040EZ. The form 1040EZ does not have the appropriate lines for reporting IRA rollovers.
Report the total amount of the rollover as a non-taxable IRA distribution. On Form 1040, non-taxable IRA distributions are reported on line 15a. On form 1040A, use line 11a.
Figure the taxable portion of your IRA distribution. For rollovers from a traditional IRA to another traditional IRA or a Roth IRA to another Roth IRA, none of the rollover is taxable as long as you redeposited the entire amount. For traditional IRA to Roth IRA rollovers, the entire amount is taxable unless you had non-deductible contributions. If so, the portion of the rollover originating from non-deductible traditional IRA contributions is not taxable.
Report the taxable portion of your rollover, if any, as a taxable IRA distribution. For Form 1040 users, report this amount on line 15b. For Form 1040A users, report this amount on line 11b.
Write "rollover" next to the line -- line 11 for Form 1040A or line 15 for Form 1040 -- that you reported the rollover on to alert the IRS that you performed a rollover.
Report any federal income tax withholding from your rollover as income tax withheld. For Form 1040 users, this is line 61. For Form 1040A, this is line 38.
- Internal Revenue Service: Publication 590
- Bankrate.com: Reporting 401(k) and IRA rollovers
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Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."