Could someone please explain the question "Did you inherit this IRA from <Insert Financial institution>"? My mom passed away late last year and I have a few 1099-r from her retirement accounts where the assets were either transferred directly into an inherited IRA at another institution or where I opted to take the cash amount offered. I just have a code 4 in box 7 on both of these (I am trying to get a corrected 1099-r for one that should be considered a direct rollover.
If I say "yes" to the question about inheriting the IRA (I can't remember if it is an annuity that had not started paying out yet), it then asks if I am the spouse or not and then charges me the tax on the full amount. It does not ask me what I did with the money unless I say "no". That is the only time I am given the option to say I did a direct rollover or cash out.
