Inherited IRA 1099-R Indirect Rollover

Forum|Forum|3 years ago
February 19, 2023
1 reply
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Hello, I have a 1099-R for an Inherited IRA that was indirectly rolled over within 60 days of the distribution. I am using the 2022 Windows version of TT Deluxe.

The 1099-R has the same amount "the full distribution" in box 1 and 2a, 2b has both boxes checked, and box 7 indicates "4", IRA/SEP/Simple is checked.

When I enter this into TT I am not led to the question "What Did You Do With The Money From This Payer?", so I am unable to designate it as a rollover.

The beneficiary of this distribution is not over 70 1/2, but the original owner of the IRA that is being inherited was over 70 1/2.

I have seen discussion in the past of this being an issue, but was hopeful that was not till the case. Any suggestions would be appreciated.

fanfare

Level 15

you can't roll over any amounts into or out of the inherited IRA. However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of beneficiary.

If you did not make a trustee-to-trustee transfer, it is no longer an Inherited IRA and all taxable.

@Bill_L

Bill_LAuthor

Level 2

Thank you @fanfare! That would explain it. Not good news but clarity nonetheless. That was certainly a misunderstanding/mistake in aligning the correct instructions with the intended result. Have you or others ever seen this get reversed or corrected with the distributing trustee?

Thanks again.

Opus 17

Level 15

@dmertz , comment?

@Bill_L , what do you mean by "corrected with the trustee"? An indirect rollover would be you got a check. The IRS is going to look at that check as final. It's too late to send the check back and have the old trustee send the funds directly (electronically) to the new trustee. It's as set in stone as it gets. If you really can't do an indirect rollover of an inherited IRA (news to me but there's lots I don't know), the fact that you got a check is going to seal the deal as far as the IRS is concerned.

Do you want the trustee to apologize? Pay some of the tax?

Also, a point not raised by @fanfare :

If an indirect rollover is not allowed for an inherited IRA, then the money you put in the new IRA was a contribution, not a rollover, and was subject to the annual contribution limits. If the amount was more than $6000 (or $7000 if over age 50), or more than your contribution limit based on your other tax situations, you need to pull it back out of the IRA as an excess contribution.