How do I report the RMD taken on my deceased husband’s IRAs before the IRAs rolled over to me? TurboTax won’t generate the necessary Form 8606.

[dmertz]

Is it your name that is on the Form 1099-R for this distribution?

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

Is the IRA/SEP/SIMPLE box marked?

Did your husband have basis in nondeductible traditional IRA contributions?

[farr167889]

Yes, my name is in the 1099R for this distribution.

The code in Box 7 is 4.

Yes, the IRA/SEP/SIMPLE box is checked.

Yes, my husband had basis in nondeductible traditional IRA contributions.

[JulieS]

This is how to enter a distribution from an inherited IRA account:

1. Select Federal, then Wages & Income.
2. Find IRA, 401(k), Pension Plan Withdrawals (1099-R), on the list, click Start or Review to the right
3. Answer the first question Yes.
4. Click Continue. 
5.  At this point you can import your 1099-R, if it is from one of our partners or, scroll down to the bottom and select, Change how I enter my form. 
6. On the next screen, select Type it in myself, in the lower right corner.
7. Select 1099-R on the next screen and click Continue.
8. Enter your 1099-R on the next few screens. 
9. Continue until you get to Do any of these situations apply to you?
10. Check the box next to I inherited this IRA, click Continue.
11. On the screen Who did you inherit this IRA from?, check the box next to My spouse, fill in the name and year of death, click Continue.
12. Answer the next question based on your situation.
13. On the screen Did you have nondeductible contributions for this IRA? check the box next to Yes, you had nondeductible IRA contributions.
14. Enter the amount that is taxable.
15. Complete the remaining questions based on your situation. 

I am very sorry for your loss. If you need additional help, please reach out to this forum again. 

[dmertz]

When entering a code-4 Form 1099-R and the decedent had basis in nondeductible Traditional IRA contributions, you'll need to prepare a separate beneficiary Form 8606 outside of TurboTax (separate from your own Form 8606 that TurboTax can prepare inside of TurboTax) to calculate the nontaxable and taxable amounts.  When you indicate to TurboTax that the distribution was from an inherited account and that the decedent had basis in nondeductible traditional IRA contributions, TurboTax will ask you to enter the taxable amount determined on the beneficiary Form 8606.  You'll then need to mail your tax return to include the beneficiary Form 8606.

[farr167889]

I appreciate your reply but TurboTax is not requesting my input from the beneficiary Form 8606. I have printed Form 8606 and calculated the taxable amount but have no place to enter it. I am using the deluxe version of TurboTax. Could that be an issue? 

[dmertz]

For this code-4 Form 1099-R, make sure that you indicate that you did not put this money into your own IRA account.  This question is referring specifically to the distributed funds being reported on this Form 1099-R, not what you did with the rest of the inherited IRA.  After answering No to this question, answer Yes to the question asking if your husband had nondeductible IRA contributions and TurboTax will then ask you to enter the taxable amount.

[farr167889]

Thanks again for your help. I believe the problem is that my financial institution issued the 1099Rs for the entire distribution of my husband’s IRAs (he had 2). They did not issue separate 1099Rs for the RMDs taken after his death, but they did deduct the taxes for the RMDs. I have the amounts of RMDs taken from each IRA. Should I generate my own 1099Rs for these 2 distributions?

[dmertz · Accepted solution]

If the Form 1099-R reports amounts an amount paid you you as spouse beneficiary only part of which was rolled over, yes, TurboTax cannot handle the reporting without splitting the Form 1099-R into two, one reporting the portion not rolled over (the RMD) and the other reporting the portion rolled over.

These transactions would have been better handled by either taking a distribution of the RMD and doing a nonreportable trustee-to-trustee transfer of the remainder of the inherited IRA to your own account or by doing a trustee-to-trustee transfer of the entire inherited IRA to your own account and then taking the RMD.  Nonreportable trustee-to-trustee transfers also avoid running afoul of the one-rollover-per-12-months limitation.