@kewh wrote:
The reply from dmertz doesn't apply to a non-spouse beneficiary's direct rollover to an Inherited IRA.
I did a direct rollover of my father's 401k to an Inherited IRA, permissible by law. I received a 1099-R for the rollover amount, and a separate 1099-R for the annual RMD (required minimum distribution). The payer confirmed that a 1099-R must be issued for any and all distributions, whether the money is paid to another qualifying plan or received personally. The code in Box 7 indicates the type of distribution, which determines whether or not the event was taxable. (My rollover 1099-R, Box 7 has code 4G, indicating a direct roll-over to a qualified plan, and Box 2a shows no taxable amount.)
TurboTax prompts are confusing. The 2019 tax year software only has options to indicate rollovers to a Roth 401k or Roth IRA. (An Inherited IRA has a different tax treatment.) I answered "No" to this being a Roth 401k or a Roth IRA, and "No" to the question: "Was this withdrawal an RMD?" The answer "No" is shown as "not common." I doubt Inherited IRAs are uncommon, so I've provided this response to help other, potentially confused users.
(Note: The second 1099-R, for my annual RMD, is a "Yes" to the RMD withdrawal question, and correctly has a taxable amount in box 2a.)
dmertz answer was correct and refereed to an inherited Traditional non-spousal *IRA*, not a 401(k). The code 4G indicates that yours is was rolled into an inherited Traditional IRA that should remain in the name if the deceased with you as benificuary.
It is not necessary for the interview to ask additional questions because there are only 3 possibilities, A 401(k) Roth, a Roth IRA, or a Traditional IRA. If the answer to the first 2 are no the no further question is necessary.
**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.**
