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How to answer "Did you inherit the IRA" for spousal transfer?
I'm helping Mom with her taxes. Her husband (Dad) passed away in 2022. (They're both 80+ years old.) She was the sole beneficiary of his SEP IRA. The brokerage transferred all funds from his SEP IRA into Mom's pre-existing SEP IRA at the same brokerage. Mom received two 1099-Rs from the brokerage for her sole SEP IRA 2022:
1099-R #1: Box 7 code = 4 (Death), no other code. box 1 = box 2a = the RMD Dad owed for 2022. This RMD was issued by the brokerage as part of their overall handling of the funds transfer, early in 2022. Of course, this RMD is just a fraction of the value of Dad's IRA, and the rest was properly transferred to Mom's IRA.
1099-R #2: Box 7 code = 7 (Normal), no other code. box 1 = box 2a = The RMD Mom took later in 2022 (based on the size of her account from before the transfer).
This tells me the transfer was a "nonreportable, trustee-to-trustee transfer" (correct?). Not considered a rollover (right?). So that takes me to TurboTax's innocent question for each of those 1099-Rs:
"Did <Mom's name> Inherit the IRA from <Brokerage name>?"
I can see arguments in favor of both NO and YES. (YES: She certainly inherited funds that now make up the majority of what's in her SEP IRA. NO: this is the very same SEP IRA account she already had, just with a larger balance now.)
If she answers YES, and fills in that it's her spouse, and that the money was put into Marilyn's own IRA account in 2022 (which SEEMS to be closest to the truth), then TurboTax characterizes these RMDs as Rollovers (saying so on 1040 line 4a, with 4b now 0). Now Mom pays no taxes on these RMDs. That's gotta be wrong, I think. Mom is responsible for paying taxes on BOTH distributions (from both 1099-Rs above), right?
So should she answer that she did NOT inherit the IRA for both 1099-Rs? If so, is there ANYWHERE that she needs to report that she inherited the IRA at all?
Thanks in advance!