When you changed jobs, your 401(k) went with you. You transferred it directly from your old workplace to your new company's plan, never touching the cash yourself.

That was a wise move. Not only did you maintain your retirement fund's consistent earnings, you also helped minimize tax hassles.

So what's with that Form 1099-R you got, the one with the notation that a copy has gone to the Internal Revenue Service? You thought you followed all the rules to avoid any taxes on your retirement-plan transfer.

Don't panic, you did all the right things. But the IRS still wants to keep track of any so-called trustee-to-trustee transfers that you make with tax-deferred retirement accounts. The key here is reporting the amount moved and the amount that's taxable. With direct rollovers, these are two dramatically different figures.

The 1099-R you received will help you differentiate -- and properly report -- these amounts.

What the 1099-R tells you

Also check box 7, the distribution code. A letter or number should be here, explaining to the IRS exactly why your retirement money was taken out and just what was done with it. Direct rollovers to another qualified plan are coded with the letter "G." This includes transfers to another company's 401(k) plan, a tax-sheltered 403(b) annuity, a government 457(b) plan or an IRA.

The code lets the IRS know that the money was never in your hands, an important point when it comes to taxes on transferred retirement funds. If you had taken the money out yourself, taxes would have been withheld.

What you tell the IRS