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confucious52
New Member

I was a beneficiary in an IRA and got a lump sum payment. Is the gross distribution the taxable amount even though the 1099R shows an employee contribution?

Since there were employee contributions, it would seem like the taxable portion would be the excess of the gross distribution over the employee contributions but maybe it makes a difference if the IRAs were ROTH or pre-tax contributions?

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Accepted Solutions
dmertz
Level 15

I was a beneficiary in an IRA and got a lump sum payment. Is the gross distribution the taxable amount even though the 1099R shows an employee contribution?

A Form 1099-R for a distribution from an IRA should never have an amount in box 5.  This is almost certainly a distribution from some kind of account other than an IRA and I expect that IRA/SEP/SIMPLE box on the From 1099-R is not marked.

Yes, the amount in box 5 is the amount of this distribution that is not taxable.  The taxable amount should be present in box 2a, the difference between the amount in box 5 and the amount in box 1.  (I'm assuming that there is no amount shown in box 6.)

When you enter this Form 1099-R, be sure to enter it accurately, with the state of the IRA/SEP/SIMPLE box on TurboTax's 1099-R matching that of the Form 1099-R provided by the payer.  Since this is apparently not an IRA, this box should not be marked and TurboTax will include the gross amount from box 1 on Form 1040 line 16a or Form 1040A line 12a but include only the taxable amount from box 2a on line 16b or 12b.

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2 Replies
dmertz
Level 15

I was a beneficiary in an IRA and got a lump sum payment. Is the gross distribution the taxable amount even though the 1099R shows an employee contribution?

A Form 1099-R for a distribution from an IRA should never have an amount in box 5.  This is almost certainly a distribution from some kind of account other than an IRA and I expect that IRA/SEP/SIMPLE box on the From 1099-R is not marked.

Yes, the amount in box 5 is the amount of this distribution that is not taxable.  The taxable amount should be present in box 2a, the difference between the amount in box 5 and the amount in box 1.  (I'm assuming that there is no amount shown in box 6.)

When you enter this Form 1099-R, be sure to enter it accurately, with the state of the IRA/SEP/SIMPLE box on TurboTax's 1099-R matching that of the Form 1099-R provided by the payer.  Since this is apparently not an IRA, this box should not be marked and TurboTax will include the gross amount from box 1 on Form 1040 line 16a or Form 1040A line 12a but include only the taxable amount from box 2a on line 16b or 12b.

View solution in original post

DS30
New Member

I was a beneficiary in an IRA and got a lump sum payment. Is the gross distribution the taxable amount even though the 1099R shows an employee contribution?

It depends

When it comes to a distribution from retirement fund, if all contributions (whether from you or your employer) were pre-taxed contribution, then the entire distribution would be considered taxable in the year it was received.

(This is different from a Roth IRA where contributions are made with post-taxed money and a distribution of previously taxes contributions are considered tax-free.)

Please click this link IRS - Traditional IRA for more information.

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