The Tax Questions Blog

Question: Tax question on 401k distribution?

I moved some post tax 401k money to a brokerage account (my own money I put in, no employer money). My 1099R shows the gross distribution, but as taxable amount shows zero. Is this a taxable event? The brokerage house is Fidelity, and they're usually pretty good about calculating this. I was told I can do this tax free, but want to be sure. The distribution code is 1 - Early distribution, no known cause.

Answer: If the 1099-R shows zero in taxable amount then it's a non-taxable event. I find it odd though that there was no earnings on this amount. Earnings on a post-tax 401k account are pre-tax and thus should be taxed upon distribution. Did you get 2 1099-R's? 1 for post-tax showing what you said above and then 1 for pre-tax that you rolled over?

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