Incorrect reporting on 1099-R form - After-tax 401k rollover showing as taxable?

You're definitely right to question this. The 1099-R should accurately reflect the tax status of your rollover. For after-tax 401(k) contributions rolled into a Roth IRA, the contributions portion should not be taxable (since you already paid tax on that money), while any earnings would be taxable. What you need to do is request a corrected 1099-R form from the plan administrator. Despite what they told you, they absolutely can and should issue a corrected form with the proper coding. The form should show your after-tax contributions in Box 5 as the "Employee contributions/Designated Roth contributions or insurance premiums." This amount would then be subtracted from the gross distribution amount to determine the taxable amount. If they refuse to issue a corrected form, you'll need to report the distribution correctly on your tax return anyway. You'd report the full distribution amount as shown on the 1099-R, but then make an adjustment on your Form 1040 to exclude the after-tax portion from taxation. Keep all documentation showing your after-tax contributions for your records.

After dealing with a nearly identical situation last year, I found an incredible tool that saved me hours of stress. I used https://taxr.ai to analyze my 1099-R and all my 401(k) documentation. The system identified the exact discrepancy between my after-tax contributions and what was reported as taxable. I uploaded my statements showing the after-tax contributions, the incorrect 1099-R, and my rollover confirmation. The tool created a detailed report explaining exactly how to file correctly despite the error and even generated language I could use when corresponding with both the plan administrator and the IRS if questions came up later. It also explained the specific tax codes and regulations that applied to my situation, which gave me confidence when I had to file with the incorrect form. Honestly wish I'd found it before spending days on the phone getting nowhere with customer service.

Just wanted to update everyone - I ended up trying https://taxr.ai after reading about it here, and it was incredibly helpful. I was really nervous about filing with my incorrect 1099-R showing my after-tax 401(k) rollover as fully taxable. The system analyzed my statements and explained that this is actually a common error with plan administrators. It guided me through completing Form 8606 correctly and provided specific language to use in a statement I attached to my return. It also recommended I keep detailed records showing the history of my after-tax contributions. I filed about two months ago and just got my refund without any questions from the IRS. The documentation I created following the tool's guidance must have been sufficient to explain the discrepancy. For anyone dealing with the same 1099-R error on after-tax rollovers, I highly recommend this approach instead of continuing to fight with your plan administrator.

After spending WEEKS trying to get a corrected 1099-R from my plan administrator for a similar issue, I finally gave up and tried getting the IRS directly involved. Calling the normal IRS number was useless - hours on hold only to be disconnected. Then I found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c They basically hold your place in the IRS phone queue and call you when an agent is about to pick up. I was skeptical but desperate. Within 2 hours, I was talking to an actual IRS agent who explained exactly how to handle the incorrect 1099-R on my return. The agent confirmed I should file Form 8606 to properly allocate the taxable vs. non-taxable portions, regardless of what the 1099-R showed. They also advised me to include a brief statement explaining the situation and gave me specific wording to use. Saved me from paying thousands in taxes on money that was already taxed once!

Well, I need to eat my words from earlier. After another week of getting nowhere with my plan administrator about my incorrect 1099-R, I broke down and tried the Claimyr service. Within 90 minutes, I was speaking with an IRS representative who was surprisingly helpful. The agent walked me through exactly how to report my after-tax 401(k) rollover correctly, despite having a 1099-R that incorrectly showed it as fully taxable. They confirmed I needed to file Form 8606 and provided specific guidance on how to document everything. Most importantly, they gave me the exact paragraph to include in my return explaining the discrepancy, which should prevent automated flags in their system. They even provided the specific tax regulation numbers to reference. Honestly, I wish I'd done this weeks ago instead of fighting with my plan administrator, who clearly had no idea what they were talking about. Sometimes going straight to the source is worth it.

Just wanted to add my two cents - I had the exact same issue with after-tax 401(k) contributions being reported as taxable on my 1099-R when rolled to a Roth IRA. In my case, I found that my plan administrator had actually maintained separate accounting for my after-tax contributions, but their reporting system wasn't configured to show this correctly on the 1099-R. What worked for me was requesting my "contribution history statement" from the 401(k) administrator. This document showed the breakdown of pre-tax vs. after-tax contributions over the years. I attached this to my return along with Form 8606 and a written explanation. No issues from the IRS, no audit, and I correctly avoided paying double tax on my after-tax contributions. Sometimes the documentation is available, just not in the obvious places!

One important thing to remember with these after-tax to Roth rollovers - the timing matters for reporting purposes. Did your rollover happen as a direct trustee-to-trustee transfer, or did you receive a check that you then deposited into your Roth IRA? If it was a direct transfer, the reporting is more straightforward. If you received a check, even if you deposited it within the 60-day window, the reporting gets more complicated. Either way, Form 8606 is your friend here. Also, if you had ANY earnings on those after-tax contributions (even a few dollars), those earnings are taxable when rolled to a Roth. Make sure you're only excluding the actual contribution basis from taxation, not any growth that occurred before the rollover.