1099-R Inherited IRA

[pj3331]

I have a non-spousal Inherited IRA. I took a required distribution and received 1099-R. However, on the IRS 1099-R form the IRA/SEP/Simple box is NOT checked (next to box 7). Shouldn't my financial institution have checked the IRA/SEP/Simple box? The financial institution is telling me that the Inherited IRA is not a standard plan because someone else contributed to it; thus, they won't check the IRA/SEP/Simple box.

[MarilynG1]

On the page that follows, you must answer Yes when asked if you inherited.  Failing to answer Yes causes TurboTax to treat the distribution as coming from your own IRA and apply your basis in nondeductible traditional IRA contributions.

Don't be misled by the poor wording of the question that seems to be asking is you inherited from a financial institution.  It's asking if you received the distribution from an inherited IRA, reported with code 4 in box 7 (which TurboTax should already know since you would have entered the code 4 in box 7).

Here's more info about Inherited IRA Distributions.

@pj3331 

[dmertz]

What is the code in box 7 of the Form 1099-R?

[pj3331]

The code in box 7 is "4". (death).

[dmertz · Accepted solution]

Are you sure that this is indeed an IRA?  If the account is truly an IRA, the financial institution is required to make the IRA/SEP/SIMPLE box on this form 1099-R.  Having the box unmarked means that the financial institution is saying that the distribution was from some kind on non-IRA retirement account.  The fact that "someone else contributed to it" has no bearing on whether or not the IRA/SEP/SIMPLE box needs to be marked.

[pj3331]

Yes! Thank you! The bank just called me and said they have made the correction! It is indeed a traditional IRA. I don't know why the bank thought that an inherited IRA was not an IRA!

[dmertz]

It's always banks that make such errors.  Bank personnel are notoriously uninformed about the rules regarding IRAs.