1099 R for deceased taxpayer's IRA
mammondee
The 1099 reads as follows:
box 1 Gross distribution: $200,000
box 2a taxable amount: $200,000
box 2b taxable amount not determined: Y
box 2b total distribution: Y
box 7 distribution code: 4
box 8 IRA/SEP/SIMPLE: Y
It seems to me box 1 is corrected, but box 2 should read $0, and box 7 should be code 4G
Am I correct, and if so, should I ask the bank to send a corrected 1099R?
If they will not send a corrected 1099R, I guess I will simply "override" my software to show $0 taxable, and hope the IRS sends no correspondence to us!
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Alan
> The deceased taxpayer was a 80 year old widow taking minimum required distributions from her $200K IRA. Upon her death, and at the request of the executor of her will, the IRA was rolled into equal inherited IRA's for her four beneficiaries.
>
> The 1099 reads as follows:
>
> box 1 Gross distribution: $200,000
> box 2a taxable amount: $200,000
> box 2b taxable amount not determined: Y
> box 2b total distribution: Y
> box 7 distribution code: 4
> box 8 IRA/SEP/SIMPLE: Y
>
> It seems to me box 1 is corrected, but box 2 should read $0, and box 7 should be code 4G
>
> Am I correct, and if so, should I ask the bank to send a corrected 1099R?
>
> If they will not send a corrected 1099R, I guess I will simply "override" my software to show $0 taxable, and hope the IRS sends no correspondence to us!
>
the decedent's IRA was rolled over into 4 separate IRAs of the
beneficiaries. I will assume you meant to say the gross distribution for
each of the 4 beneficiaries was $50K. If not... then to whom was the
$200K 1099-R issued?
2. It is my understanding that trustee-to-trustee transfers from one IRA
to another IRA do not get reported.
3. If the 1099-R was issued with Code 4, I have to believe that the
trustee distributed equal amounts to the 4 beneficiaries who then
deposited the amount into their own "Inherited IRA" within the requisite
60 day period.
As such, the 1099-R with $50K is coded correctly. The beneficiary
reports the gross of $50K and taxable of zero. The software I use has an
exclusion worksheet below the 1099-R form, where one enters the amount
rolled over. The software then places the word Rollover on Line 15 of
the 1040.
--
Alan
http://taxtopics.net
mammondee
> 1. I don't understand why the 1099-R says $200K, when you stated that
> the decedent's IRA was rolled over into 4 separate IRAs of the
> beneficiaries. I will assume you meant to say the gross distribution for
> each of the 4 beneficiaries was $50K. If not... then to whom was the
> $200K 1099-R issued?
The 1099R was issued in the deceased name and social security number for $200,000.
> 2. It is my understanding that trustee-to-trustee transfers from one IRA
> to another IRA do not get reported.
I agree this is true when a living owner directly transfers from one fiduciary to another fiduciary; However, is this true even if the transfer is due to the owner's death?
> 3. If the 1099-R was issued with Code 4, I have to believe that the
> trustee distributed equal amounts to the 4 beneficiaries who then
> deposited the amount into their own "Inherited IRA" within the requisite
> 60 day period.
The executor assures me the bank "directly" deposited $50k into four different inherited IRA accounts. Two of the inherited IRA's were with the same bank, and two of the IRA's were with different fiduciaries. None of the beneficiaries received any monies in their hands, but rather, directly to their inherited IRA's.
> As such, the 1099-R with $50K is coded correctly. The beneficiary
> reports the gross of $50K and taxable of zero. The software I use has an
> exclusion worksheet below the 1099-R form, where one enters the amount
> rolled over. The software then places the word Rollover on Line 15 of
> the 1040.
If the entire $200 IRA was "directly" rolled into four beneficiary IRA's would the deceased taxpayer receive any 1099R at all? Would the four beneficiaries receive a 1099R?
IF the balances were distributed to the beneficiaries in check form, would the beneficiaries receive the 1099R or would the deceased taxpayer receive the 1099R?
D. Stussy
news:df23eb7a-99c3-46fa...@glegroupsg2000goo.googlegroups.com...
> The deceased taxpayer was a 80 year old widow taking minimum required
distributions from her $200K IRA. Upon her death, and at the request of
the executor of her will, the IRA was rolled into equal inherited IRA's for
her four beneficiaries.
>
> The 1099 reads as follows:
>
> box 1 Gross distribution: $200,000
> box 2a taxable amount: $200,000
> box 2b taxable amount not determined: Y
> box 2b total distribution: Y
> box 7 distribution code: 4
> box 8 IRA/SEP/SIMPLE: Y
>
> It seems to me box 1 is corrected, but box 2 should read $0, and box 7
should be code 4G
Box 7: "4" means death. Such is sufficient. Some software only allows
one code.
Box 2: Well, that's going to depend on how the rollover was performed.
However, it is incorrect to have both Box 2a with a dollar amount and 2b
with yes.
- If it were performed "in house" with other accounts at the same
custodian, then I agree it should be zero.
- If it were performed by a distribution which went through the
beneficiaries' hands, then it should be determined and not zero.
- If it were performed by a direct custodian-to-custodian rollover, it's
going to depend on the instructions given to the decedent's custodian. Did
they know it was another custodian that was receiving the amounts?
> Am I correct, and if so, should I ask the bank to send a corrected 1099R?
>
> If they will not send a corrected 1099R, I guess I will simply "override"
my software to show $0 taxable, and hope the IRS sends no correspondence to
us!
On whose return(s)? The 1099-R appears to be issued post-death under the
decedent's TIN. There is no matching tax return to report such.
Just be glad that the bank marked box 7 with a "4."
Alan
>
>> 1. I don't understand why the 1099-R says $200K, when you stated that
>> the decedent's IRA was rolled over into 4 separate IRAs of the
>> beneficiaries. I will assume you meant to say the gross distribution for
>> each of the 4 beneficiaries was $50K. If not... then to whom was the
>> $200K 1099-R issued?
>
>
> The 1099R was issued in the deceased name and social security number for $200,000.
The trustee doesn't know what they are doing. You don't issue 1099-Rs to
a deceased person as that person no longer exists. 1099-Rs issued for
distributions from a decedent's qualified plan or IRA go to the
beneficiary who received the distribution.
>
>
>> 2. It is my understanding that trustee-to-trustee transfers from one IRA
>> to another IRA do not get reported.
>
> I agree this is true when a living owner directly transfers from one fiduciary to another fiduciary; However, is this true even if the transfer is due to the owner's death?
>
I don't see anything in the rules that makes an exception for trustee to
trustee transfers to an account that is allowed to receive the transfer
just because the owner died. But, even if I am wrong, the trustee should
have issued 4 1099-Rs in the amount of $50K to each of the
beneficiaries... all with a Code 4.
>> 3. If the 1099-R was issued with Code 4, I have to believe that the
>> trustee distributed equal amounts to the 4 beneficiaries who then
>> deposited the amount into their own "Inherited IRA" within the requisite
>> 60 day period.
>
> The executor assures me the bank "directly" deposited $50k into four different inherited IRA accounts. Two of the inherited IRA's were with the same bank, and two of the IRA's were with different fiduciaries. None of the beneficiaries received any monies in their hands, but rather, directly to their inherited IRA's.
>
This statement tells me that the trustee for sure was off base issuing a
1099-R for $200K to a deceased person.
>> As such, the 1099-R with $50K is coded correctly. The beneficiary
>> reports the gross of $50K and taxable of zero. The software I use has an
>> exclusion worksheet below the 1099-R form, where one enters the amount
>> rolled over. The software then places the word Rollover on Line 15 of
>> the 1040.
>
> If the entire $200 IRA was "directly" rolled into four beneficiary IRA's would the deceased taxpayer receive any 1099R at all? Would the four beneficiaries receive a 1099R?
>
See above.
> IF the balances were distributed to the beneficiaries in check form, would the beneficiaries receive the 1099R or would the deceased taxpayer receive the 1099R?
>
The beneficiaries and see above.
--
Alan
http://taxtopics.net
mammondee
> Box 7: "4" means death. Such is sufficient. Some software only allows
> one code.
>
> Box 2: Well, that's going to depend on how the rollover was performed.
> However, it is incorrect to have both Box 2a with a dollar amount and 2b
> with yes.
>
> - If it were performed "in house" with other accounts at the same
> custodian, then I agree it should be zero.
> - If it were performed by a distribution which went through the
> beneficiaries' hands, then it should be determined and not zero.
> - If it were performed by a direct custodian-to-custodian rollover, it's
> going to depend on the instructions given to the decedent's custodian. Did
> they know it was another custodian that was receiving the amounts?
I spoke with the banker myself. She made it clear she knew two of the inherited IRA accounts were opened with her bank, and two of the inherited IRA accounts were with other fiduciaries. She even mentioned the two that were transferred out because she remembers the beneficiaries bringing in all the paperwork for the direct rollover.
>
> > Am I correct, and if so, should I ask the bank to send a corrected 1099R?
> >
> > If they will not send a corrected 1099R, I guess I will simply "override"
> my software to show $0 taxable, and hope the IRS sends no correspondence to
> us!
>
> On whose return(s)? The 1099-R appears to be issued post-death under the
> decedent's TIN. There is no matching tax return to report such.
The deceased taxpayer is my client. I am filing her final return. The way I have the 1099 entered at this time is as a gross distribution of $200,000 and then a rollover to show zero taxable. I am simply doing this so the IRS computers will match......This is my solution, but I am open to other suggestions.
>
> Just be glad that the bank marked box 7 with a "4."
Thank goodness for the small things!!
Phil Marti
> The deceased taxpayer was a 80 year old widow taking minimum required distributions from her $200K IRA. Upon her death, and at the request of the executor of her will, the IRA was rolled into equal inherited IRA's for her four beneficiaries.
>
> The 1099 reads as follows:
By now it should be clear to everyone that the 1099-R was erroneous
and that no 1099 should have been issued to anyone. If the bank won't
correct it just report it on line 15 with a zero on 15b and be done
with it. Tell the executor to hang on to the paperwork in case
there's an inquiry during underreporter. It won't be the first bad
1099-R the IRS has seen.
Phil Marti
VITA/TCE Volunteer
Green Eggs & NoSpam
"Phil Marti" <prm2...@verizon.net> wrote in message
news:b70b8b6d-8bc1-4c7d...@34g2000pru.googlegroups.com...
> On Mar 21, 1:32 pm, mammondee wrote:
>
>> The deceased taxpayer was a 80 year old widow taking minimum required
>> distributions from her $200K IRA. Upon her death, and at the request of
>> the executor of her will, the IRA was rolled into equal inherited IRA's
>> for her four beneficiaries.
>>
>> The 1099 reads as follows:
>
> By now it should be clear to everyone that the 1099-R was erroneous
> and that no 1099 should have been issued to anyone. If the bank won't
> correct it just report it on line 15 with a zero on 15b and be done
> with it. Tell the executor to hang on to the paperwork in case
> there's an inquiry during underreporter. It won't be the first bad
> 1099-R the IRS has seen.
>
> Phil Marti
> VITA/TCE Volunteer
I agree with Phil. The trustee should have ensured that the owner's MDIB was
made for the year. If not, they should have made it and distributed the
proceeds to the designated beneficiaries. The only 1099-R for 2010 should
have been for the original owner's 2010 distribution. The remainder should
have been transferred to (non-spouse?) beneficiary IRAs, which the
beneficiaries have to begin taking minimum distributions beginning the year
after death based on the new Table 1 in IRA Publication 590. They do not get
to recalculate each year, but instead use the factor based on the decedent's
and beneficiary's age in the Table, then reduce that by 1 each year. Also,
beneficiary IRAs are supposed to be titled in the name of the deceased FBO
<beneficiary's name>, beneficiary. Distributions are made using the
beneficiary's SSN.
"Other designated beneficiary. Use the life expectancy listed in the table
next to the beneficiary's age as of his or her birthday in the year
following the year of the owner's death, reduced by one for each year since
the year following the owner's death." (pg. 36)
Of course, beneficiaries can withdraw any amount more than the RMD they
want, and report it as ordinary income. I presume the IRA had no cost basis
(non-deductible contributions) to complicate things.
......................................................................................
"The center of the universe always is someplace else."
mammondee
>From this thread I have come to ASSUME the actual "transfer" of the funds into the four "beneficiary IRA's" should not be reported to the IRS through a 1099R at all. A 1099R should only be filed if there is a subsequent distribution from one of these beneficiary IRA's.
D. Stussy
> To update this thread, the bank re-issued a 1099R. They insisted the
1099 be issued in the deceased name and social security number, just as
before. However, this time they agreed to report zero in box 2a (taxable
amount) and code 4G in box 7 (death, rollover). With these changes, I
decided to not pursue it any further. At least the IRS is notified of zero
taxable distributions that were rolled over due to death.
>
> >From this thread I have come to ASSUME the actual "transfer" of the
funds into the four "beneficiary IRA's" should not be reported to the IRS
through a 1099R at all. A 1099R should only be filed if there is a
subsequent distribution from one of these beneficiary IRA's.
Since one cannot cancel or withdraw a 1099, reporting with zero is the
appropriate action.