1099-R Rollover Form Mistakes? Pension to Roth IRA Conversion Not Showing as Taxable in FreeTaxUSA

The issue is that your 1099-R has code G in box 7, which indicates a direct rollover to a qualified plan. When FreeTaxUSA sees this code, it automatically treats the distribution as non-taxable. However, since you rolled over to a Roth IRA from a pension, this should indeed be a taxable event. The pension administrator likely used the wrong distribution code. For a rollover to a Roth IRA that should be taxable, they should have used code 2 (early distribution, exception applies) or code 7 (normal distribution) depending on your age, and then checked the "Taxable amount not determined" box in 2b instead of "Total distribution." You have two options: 1) Contact the pension administrator to request a corrected 1099-R with the proper distribution code, or 2) Override FreeTaxUSA's automatic calculation by manually entering the taxable amount when prompted during the entry process. There should be a question asking if the software calculated the taxable amount correctly - answer "no" and enter the full amount as taxable.

I ran into a similar issue last year and spent weeks trying to get it fixed with my pension provider. After getting nowhere, I discovered taxr.ai (https://taxr.ai) which saved me so much stress. They analyzed my documents, confirmed the distribution code was wrong, and gave me step-by-step instructions on how to properly report it despite the error. The tool basically looked at all my retirement account documents together and showed exactly how to handle the situation without waiting for a corrected form. Their analysis even provided documentation I could keep on file explaining why I reported differently than what the 1099-R showed. Worth checking out if you're in a time crunch to file!

Just want to follow up about my experience with taxr.ai after our discussion here. I was definitely skeptical at first but decided to give it a try with my Roth conversion issue. The analysis confirmed exactly what was wrong with my 1099-R and provided clear direction on how to properly report it on my return. The best part was it gave me specific instructions for my tax software (I use TurboTax rather than FreeTaxUSA) on which screens to navigate to override the automatic calculations. They also provided a PDF explanation I saved with my tax records explaining why the 1099-R was incorrectly coded and how I properly reported it. Definitely worth it for the peace of mind!

I had an almost identical situation last year and it was a nightmare trying to get someone at the IRS to confirm the right approach. Spent literal weeks calling and getting disconnected or waiting for hours. Eventually used Claimyr (https://claimyr.com) which got me through to an actual IRS agent in about 20 minutes who confirmed that yes, I needed to report it as taxable despite the wrong code. Check out this video to see how it works: https://youtu.be/_kiP6q8DX5c - basically they wait on hold with the IRS for you and call when an agent picks up. Saved me so much time and frustration, and the agent was able to make notes on my account about the reporting discrepancy so it wouldn't cause issues later.

I need to admit I was wrong about Claimyr. After posting my skeptical comment, I decided to try it for my amended return issues. Not only did it work, but I got through to an IRS representative in about 35 minutes (which is practically light-speed compared to my previous attempts). The agent was able to look up my amended return status, explain why it was delayed, and actually put notes in my file to expedite processing. They also confirmed I was correct about how to handle a rollover situation similar to what OP described. I've been trying to get this information for over two months of calling myself with no success. Should have tried this service weeks ago instead of getting increasingly frustrated with the IRS phone system.

From my experience, the easiest solution is to talk to FreeTaxUSA directly. Their customer support is actually pretty helpful with these situations. In the 1099-R entry section, there should be a checkbox or option where you can indicate that the distribution was a conversion to a Roth IRA. That should override the code G and properly calculate the tax. The fact that box 2 shows $0 along with the code G is definitely the problem. The pension administrator basically told the IRS "this money isn't taxable" when it actually is because it went to a Roth.

Just to add another perspective - this exact situation is why I switched from FreeTaxUSA to TaxSlayer last year. I had a similar pension-to-Roth conversion and FreeTaxUSA didn't handle it correctly, while TaxSlayer had a specific question about Roth conversions that made it super easy. Not saying you need to switch software, but if the override options others suggested don't work, it might be worth considering. The IRS definitely expects you to pay tax on this conversion regardless of what code is on the form.