My wife's grandfather passed away in late 2020. In early 2021, the family trust manager (one of my wife's aunts) opted to do a total distribution on both the traditional IRA and Roth IRA that were in the family trust. The grandfather's final will indicated that both IRA's be split evenly among children and grandchildren, so I assume that she thought it would be easiest to manage the inheritance if everything was distributed all at once. She mailed checks to each of the beneficiaries (one check for each IRA), along with a causal note explaining that one check was for the traditional IRA and one was for the Roth IRA, and that we should report this on our taxes. There were no details provided beyond this note.
My wife and I paid estimated taxes on the traditional IRA throughout 2021, but these estimates were simply based on the entire value of the check we received, not considering any basis for the IRA.
Now that we are filing our 2021 taxes, I am wondering if we should have received a 1099-R for the money we received. Should a 1099-R have been issued for each IRA, even though we wouldn't pay any taxes on the Roth IRA? Should the aunt have given us more formal documentation beyond a check and casual note? Should the taxes we pay on the traditional IRA be based on the entire value of the funds received or just on the non-basis portion? Does the fact that this was part of a trust complicate the issue?
Talking about the deceased grandfather is a sensitive subject within the family so I want to avoid asking an unnecessary question to the aunt. But if it is necessary for us to correctly file our taxes, I will of course want to make sure that we get the correct forms.
