dmertz
Level 15

Retirement tax questions

Apparently what happened is that IB reported it as a reportable distribution but Athene internally coded it as a nonreportable trustee-to-trustee transfer, resulting in no reporting on Form 5498, causing the IRS to understandably question whether or not the rollover reported on your tax return was actually completed.  Because you reported it as a distribution an rollover and assuming that you did no other IRA rollovers in the 12 months before and after the distribution from IB, you'll just continue to treat it as a normal 60-day distribution and rollover and provide this explanation and documentation to the IRS that that the rollover was indeed completed.

 

(The other option would be to amend your 2018 tax return to include a substitute Form 1099-R (Form 4852) to show that the actual distribution was $0 because this was a proper nonreportable trustee-to-trustee transfer that IB mistakenly reported as a distribution.  However, with no other distribution having been rolled over that would result in a violation of one-per-12-months limitation, there's no reason to add that complication, instead just provide the documentation needed to satisfy the IRS for the way that you've already reported it as I indicated in the paragraph above.  Treating it as a nonreportable trustee-to-trustee transfer also would require that IB made the distribution payable to the Athene IRA for your benefit rather than payable to you, probably but not necessarily the case.  It's not uncommon for an IRA custodian to make the money payable to another IRA and still mistakenly report it as a distribution, which a trustee-to-trustee transfer of an IRA is not.)

 

Note that a trustee-to-trustee transfer of an IRA is different than a direct rollover.  The term direct rollover refers to a reportable movement of funds to or from a qualified retirement plan like a 401(k), not to movement of funds between IRAs.  A trustee-to-trustee transfer of an IRA is neither a distribution nor a rollover as defined in the tax code.