Inherited IRA 1099 R

Forum|Forum|7 years ago
June 4, 2019
7 replies
70 views

We inherited an ira from my wife's father when he passed away that we moved into an inherited IRA after taking out the RMD. We received a 1099 R showing the full IRA amount as taxable and TurboTax, after entering the information wants to tax the full amount as if we cashed the whole amount. I'm thinking I should not have received the 1099 showing all as taxable or am I missing something?

I do have two forms 5498, (1 shows the full IRA amount, the other shows the amount after the RMD that was transferred) just not sure what to do with them.

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Best answer by dmertz

The code 4 Form 1099-R implies that a distribution was made that is not eligible for rollover because it was made to a non-spouse beneficiary. An inherited IRA can only be moved by nonreportable trustee-to-trustee transfer. (Trustee-to-trustee can be within the same trustee).

If the account was actually properly moved by trustee-to-trustee transfer with no payment made to the beneficiary, no Form 1099-R should have be issued and you'll need to contact the trustee to obtain a corrected code 4 Form 1099-R showing that no distribution occurred.

Since a trustee-to-trustee transfer is neither a distribution nor a rollover, there should also be no rollover contribution shown on a Form 5498 from the inherited IRA.

If a distribution was actually made by paying it to the non-spouse beneficiary, putting it into an inherited IRA as if it was a permissible rollover constitutes an excess contribution to the inherited IRA that would be subject to penalty.

D

dmertzAnswer

Level 15

The code 4 Form 1099-R implies that a distribution was made that is not eligible for rollover because it was made to a non-spouse beneficiary. An inherited IRA can only be moved by nonreportable trustee-to-trustee transfer. (Trustee-to-trustee can be within the same trustee).

If the account was actually properly moved by trustee-to-trustee transfer with no payment made to the beneficiary, no Form 1099-R should have be issued and you'll need to contact the trustee to obtain a corrected code 4 Form 1099-R showing that no distribution occurred.

Since a trustee-to-trustee transfer is neither a distribution nor a rollover, there should also be no rollover contribution shown on a Form 5498 from the inherited IRA.

If a distribution was actually made by paying it to the non-spouse beneficiary, putting it into an inherited IRA as if it was a permissible rollover constitutes an excess contribution to the inherited IRA that would be subject to penalty.

C

captaind51Author

Level 2

I'm a little confused. (Note: my wife is the sole trustee for the trust and the recipient or the IRA funds as the beneficiary of the IRA.)
The IRA was moved by our (new) investment company to a special "Inheritance IRA" and the only distribution was the RMD funds taken out before the end of 2018. The remainder went straight to the new "Inheritance IRA"

The two 5498 forms came with the 1099 R (separate envelopes) but are shown as 2017
The 1099 R is shown for 2018, all three were received from the original company that held the IRA not a "trustee"