Why is 1099-R Box 2a "Taxable amount not determined" blank?

I took the distribution as cash because I needed the money for some home repairs and medical bills. It was a traditional 401k that I contributed to for about 8 years, all pre-tax as far as I know. So does this mean I'll have to pay taxes on the entire $42,800? That seems like it would be a huge tax hit.

Yes, unfortunately if you took the distribution as cash from a traditional 401k with pre-tax contributions, the entire amount is generally taxable as ordinary income. This will be added to your other income for the year, which could potentially push you into a higher tax bracket. Additionally, if you're under 59½ years old when you took the distribution, you'll likely face a 10% early withdrawal penalty on top of the regular income taxes, unless you qualify for one of the exceptions (certain medical expenses, first-time home purchase, etc.). I'd recommend gathering any documentation you have about the account to verify there were no after-tax contributions, though that's relatively uncommon in most 401k plans.

How accurate is this tool? I'm in a similar situation with my 403b distribution and my tax guy is charging me an extra $175 just to figure out the taxable amount. Does it handle situations where you've made both pre-tax and after-tax contributions over the years?

Does this actually work better than just calling the plan administrator? I tried something similar last year and it was a waste of time - ended up having to contact my old employer's benefits department anyway.

It was surprisingly accurate for my situation. It asks detailed questions about your contribution history to figure out the tax basis. It handled my mixed contributions perfectly - I had mostly pre-tax but did make some after-tax contributions during a couple years that I had forgotten about. For your second question, I actually tried calling my plan administrator first and spent 45 minutes on hold only to be told they "don't provide tax advice" and that I should "consult a tax professional." The tool was much more straightforward and gave me the documentation I needed to back up my tax filing.

Wait, this sounds too good to be true. The IRS actually answered the phone and gave helpful advice? I've literally never been able to get through to them about anything. How does this service work - do they have some special access or something?

I'm extremely skeptical of any service claiming to get the IRS on the phone quickly. I tried calling the IRS about my 1099-R issue last month and gave up after 2.5 hours on hold. Also, I doubt IRS agents are allowed to give specific tax advice about your situation - they usually just recite general rules.

No special access - they just have an automated system that keeps calling and navigating the phone tree until they get a human. Then they connect you. It's basically the same as if you kept calling back repeatedly until you got through. The IRS rep didn't give me "tax advice" exactly, but did explain how to interpret the 1099-R form and directed me to the right publications and worksheets to calculate the taxable amount. They walked me through which forms I needed to fill out given my specific distribution type. Not detailed tax planning, but definitely clearer guidance than I got from my plan administrator.

Thanks for the info on rollovers, but unfortunately it's been about 4 months since I took the distribution so I guess I'm past that 60-day window. I wish I had known about this earlier! Is there any way to reduce the tax impact at this point, or am I just stuck paying taxes on the full amount?

Unfortunately, the 60-day rollover deadline is pretty strict unless you qualify for one of the limited exceptions (like severe disasters, serious illness, or IRS errors). At this point, you're likely looking at paying taxes on the full amount. Some strategies to consider: check if you qualify for any exceptions to the 10% early withdrawal penalty (medical expenses exceeding 7.5% of AGI, health insurance while unemployed, etc.). Also, if your income is lower this year than it might be in future years, that's at least a small silver lining tax-wise. You might want to increase your withholding on other income sources or make estimated tax payments to avoid an underpayment penalty when you file.

Box 7 on my 1099-R has the code "7" in it. Not sure what that means exactly. As far as I know, all my contributions were pre-tax, but I'll have to double check my old statements. I'll look up that IRS Publication 575 you mentioned - thanks for the tip!

Code 7 typically means a normal distribution, no known exceptions to the additional tax. So if you're under 59½, you're likely subject to the 10% early withdrawal penalty unless you qualify for an exception. If all your contributions were pre-tax (which is most common with 401k plans), then unfortunately the entire distribution is typically taxable. Publication 575 has worksheets that can help confirm this. Your plan administrator should also be able to tell you if you ever made after-tax contributions, which would give you some non-taxable basis.

This is really helpful, thank you! I just checked my 1099-R and Box 5 is completely empty, so I guess that confirms no after-tax contributions. Looking back at my old statements, everything does appear to be pre-tax contributions like I thought. One question about the penalty exceptions - you mentioned medical expenses over 7.5% of AGI. Does that mean if my adjusted gross income is around $65,000 this year, I'd need medical expenses over about $4,875 to qualify for the exception? I had some major dental work done ($3,200) plus some other medical bills, but I'm not sure if I'll hit that threshold. Do I need to have paid these expenses in the same year I took the distribution, or can they be from previous years? Also, for the home repairs - are there specific types that qualify, or does any home improvement work count toward the penalty exception?