1099-R Code G - Check was cashed not rolled over - how do i handle this?

Forum|Forum|6 years ago
July 4, 2020
9 replies
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macuser_22

Alumni - Champ

What type of retirement account did the distribution come from?

Contact the payer and see if they will issue a corrected 1099-R that reflects what actually happened.

Nobody should have cashed the check that should have been payable only to the trustee of the account that it was intended to be rolled into.

If they refuse than you will need to enter it as a substitute 1099-R (4852) form coded and box amounts consistent with that type of account with the proper taxable amounts. What those would be will depend on the type of account and any non-taxable "basis" that you had in the account.

**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.**

Sbhill948Author

Level 2

Thanks for the response. It was a 401(k) distribution. Coded as a rollover - check made payable to Capital Bank & Trust FBO/participant. Participant took the check to bank and deposited check to personal checking account. How in the world did this even go through? Series of unfortunate events...

macuser_22

Alumni - Champ

The bank should not have cashed that check since it was not payable to the participant. It's a long shot, but if the bank is the same bank that holds the IRA that the check was intended for, try talking to the bank manager and explain that both the participant and the bank made an error in cashing the check and see it the money can be returned and placed in the IRA where is was intended for to complete the rollover.

As I said, first contact the 401(k) trustee before using a substitute 1099-R. It is an IRS requirement that an effort must be made to obtain a corrected 1099-R prior to using a substitute.

The substitute would have a code 7 in box 7 if the participant was age 59 1/2 or older, otherwise a code 1.

The amount of distribution in box 1. Any after-tax contributions that were in the account that were distributed in box 5. Box 2a the same as box 1 minus any amount in box 5.

The box 2a amount will be taxable plus an additional 10% penalty if under age 59 1/2.

**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.**