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Level 1

How to report a transferred inherited IRA?

I inherited my mom's IRA accounts (two of them) when she passed away in 2017.  I did not directly receive the money.  I had both accounts transferred trustee-to-trustee into a single new inherited IRA account I opened at Vanguard.  Account ownership calls out that it is inherited, shows my mom's name as deceased with me as beneficiary, etc.    One of the companies sent me a 1099R and it shows that I took a taxable total distribution.  Box 1 and 2a are the same amount (the amount i inherited).  Box 2b IS checked, along with "total distribution". Box 7 is a 4 (death) with the IRA box checked.  I don't have to take an RMD till 2018 and the 2017 distribution for my mom was covered by my brother who took his 50% all in cash.

How do I report this as a non-taxable transfer? It's for sure when I take my RMD's that they'll be reported as distributions from the new inherited IRA.  I feel like this company put me on the hook to pay double the tax.  Can they be made to correct this 1099r? OR is this normal reporting and I am entering it wrong?   Help!  Thanks!


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Accepted Solutions
Level 20

How to report a transferred inherited IRA?

The IRA company who sent you a Form 1099-R made an error in doing so.  They have reported the trustee-to-trustee transfer, which is nonreportable, as if it had been a distribution paid to you.  You'll need to obtain a corrected Form 1099-R showing $0 in boxes 1 and 2a to indicate that no distribution to you took place.

Since a non-spouse beneficiary is not permitted to roll over any distribution from an inherited IRA, TurboTax properly prohibits you from reporting any of the supposed distribution as having been rolled over.  This improper Form 1099-R also wrongly implies that any of the money it represents that has been deposited into the new inherited IRA account is an excess contribution subject to penalty.  So it's imperative that you get this corrected by the IRA company that issued the erroneous Form 1099-R.

A properly performed trustee-to-trustee transfer means that the money was never left the account in a way that gave you control of the money, such as in the form of a check made payable to you.  The money must instead be made payable directly to the new IRA for your benefit.

2 Replies
Level 20

How to report a transferred inherited IRA?

The IRA company who sent you a Form 1099-R made an error in doing so.  They have reported the trustee-to-trustee transfer, which is nonreportable, as if it had been a distribution paid to you.  You'll need to obtain a corrected Form 1099-R showing $0 in boxes 1 and 2a to indicate that no distribution to you took place.

Since a non-spouse beneficiary is not permitted to roll over any distribution from an inherited IRA, TurboTax properly prohibits you from reporting any of the supposed distribution as having been rolled over.  This improper Form 1099-R also wrongly implies that any of the money it represents that has been deposited into the new inherited IRA account is an excess contribution subject to penalty.  So it's imperative that you get this corrected by the IRA company that issued the erroneous Form 1099-R.

A properly performed trustee-to-trustee transfer means that the money was never left the account in a way that gave you control of the money, such as in the form of a check made payable to you.  The money must instead be made payable directly to the new IRA for your benefit.

Level 2

How to report a transferred inherited IRA?

Hi,

Please refer the following answer - 

https://ttlc.intuit.com/replies/4993301

Hope this helps,

Have a nice day!