@MSH SR wrote:
My wife and older sister had a younger sister who died without other heirs in 2019. Her death benefit from her retirement plan was sent to my wife together with the 1099-R. My wife then tranferred 50% of the benefit to her older sister, who reported it as income together with 50% of the income tax witheld. How do we report that without having the entire distribution taxed to my wife?
@MSH SR -Assuming that the 1099-R had a code "4" in box 7. (If not 4 then it should have been distributed to the estate to be distributed with K-1 forms so the beneficiaries of the estate)
It depends on who was named as the benificuary of her retirement plan. If your wife was the benificuary then she would receive the money and must pay the tax on it. She can do anything she want to with the money including giving it to her sister.
If there were multiple beneficiaries named on the retirement plan then the plan trustee was required by law to send a separate 1099-R to each named benificuary with only that beneficiary share.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
