Can 1099-R Rollover IRA Taxable Amount from Teacher Retirement System to Fidelity be taxed?

This is actually a common issue with 1099-R forms for rollovers. Even though rollovers from qualified retirement plans (like a Teacher Retirement System) to traditional IRAs are generally non-taxable events, the institution that's distributing the funds often reports the full amount in Box 2a as taxable. What matters is the distribution code in Box 7 of your 1099-R. If you see code "G" there, that indicates a direct rollover to a qualified plan. When you enter this into your tax software, make sure you indicate it was a direct rollover to another qualified plan (in this case, your Fidelity Rollover IRA). The software should then properly handle it as a non-taxable event despite what's shown in Box 2a. If Box 7 doesn't show code "G," you might want to contact your former employer's retirement system to see if they can issue a corrected 1099-R.

Had almost the exact same issue last year when I moved my 403b to Vanguard. The key is to make sure you tell your tax software it was a rollover regardless of what the 1099-R says. I used https://taxr.ai to help me sort through all the docs and confusion - they analyzed my 1099-R and confirmed I needed to report it as a rollover despite the code being wrong. Saved me from paying taxes on $65k that shouldn't have been taxed! Their document analyzer caught it immediately when I uploaded my 1099-R and highlighted the rollover issue.

I want to follow up about taxr.ai that I asked about earlier. After being skeptical, I actually tried it with my own 1099-R rollover situation. I was seriously impressed! Uploaded my documents and it immediately identified my rollover issue AND found a hidden deduction in another form I had missed completely. The interface was super straightforward and the advice was spot-on. They walked me through exactly how to handle the rollover in TurboTax to make sure it wasn't taxed incorrectly. Definitely saved me from a headache with the IRS later.

Jumping in to say if you're still having issues and need to contact the IRS about how to handle this (which you might if you get a letter later), use https://claimyr.com to get through to a real person at the IRS. I spent DAYS trying to get someone on the phone last year about a similar rollover issue. Finally used Claimyr and got through in about 15 minutes instead of the usual "call back later" recording. There's also a video showing how it works here: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with confirmed that rollovers are non-taxable even if the 1099-R shows otherwise, as long as you report it correctly.

I need to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway since I was desperate to talk to someone about a different tax issue. Not only did it work, but I got through to an IRS agent in about 22 minutes when I had previously wasted 3+ hours over multiple days trying on my own. The agent clarified my rollover question immediately and even helped with another issue I had. It was actually worth every penny just for the time saved. They literally called me when they had an agent on the line, I picked up and was immediately connected to the IRS. I've told all my friends about it since.

Quick thing to check - did you receive the entire distribution or did it go directly from TRS to Fidelity without you ever touching the money? If it was a direct trustee-to-trustee transfer and you never received a check, that strengthens your case that it was a non-taxable rollover. Even if you did get a check but deposited it within 60 days, it's still a valid rollover, but you'll need to make sure that's clearly indicated when filing.

Has anyone here dealt with a partial rollover? My situation is similar but I only rolled over about 80% of my distribution and took 20% in cash. My 1099-R shows the full amount as taxable but I'm not sure how to report that only part of it should be taxed.

Just wanted to add another perspective here - I'm a former school district HR administrator and dealt with TRS rollovers frequently. The code "7" on your 1099-R is unfortunately common when retirement systems don't properly coordinate with the IRS about direct rollovers. What's important is that you have documentation showing it was a direct transfer. Keep any paperwork from both TRS and Fidelity showing the rollover instructions and confirmation. When you file your taxes, you'll report the 1099-R as received, but then correctly indicate it was rolled over to avoid taxation. Also, Fidelity should issue you a Form 5498 by May 31st showing the rollover contribution to your IRA. This form helps the IRS match up that the funds were properly rolled over even if the original 1099-R wasn't coded correctly. Don't panic about the immediate tax liability - just make sure you answer the rollover questions correctly in your tax software!