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Level 2

Question

My 1099-R form has an incorrect value in Box2a. How can I correct this?

Forum|Forum|7 years ago
June 3, 2019
5 replies
0 views

No text available

TurboTax Premier Online

DoninGA

Level 15

The plan administrator has to give you a corrected Form 1099-R. Contact them as soon as possible.

queenvic8940

Level 2

I use Morgan Stanley for my financial advisors. When I received the incorrect 1099R I immediately called anfd requested a change.

NO way according to them. I should wait until May 31, 2021 for form 5498 to correct it.

dmertz

Level 15

It's unlikely that it's incorrect. Why do you think it is incorrect?
What is the code in box 7 of the Form 1099-R?
Is the IRA/SEP/SIMPLE box marked?
Is any amount shown in boxes 5 or 6?

queenvic8940

Level 2

Yes, the IRA/SEP/SIMPLE box is checked. Last year the C.A.R.E.S act allowed IRA distributions to be returned and discontinued for the year. I did so according to the letter. By August 2020, all the distribution money had been returned. However, MS still reported as money that is taxable.

DaveF1006

Level 15

Here is my my suggestion as a tax professional. Enter the 1099-R as it is recorded. Then offset the income by doing this.

Go to federal>income and expenses>all income>>show more
Less Common Income> Start
Miscellaneous Income,>start
Other reportable income>start
Next screen asks Any Other Taxable Income>yes
in the description area, be as detailed as possible. Brief but to the point.
Now enter the taxable income in Box 2a of the 1099 as a negative number with a minus sign in front of the amount.

Keep all of your documentations and letters regarding this event. Be sure to document your conversations with Morgan Stanley and their refusal to issue a corrected 1099. Also keep a copy of this advice that I have just given you. Keep all of this in your tax return folder just in case if the IRS inquires about this reporting because you will want to be fully prepared and ready to state your case if you are asked to do so.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

wjmcapAuthor

Level 2

I opened the IRA account in the 90's with deposits of after tax dollars over a period of 4 years. Therefore, the taxable amount should be less than the gross distribution, since part of the gross distribution is a return of the original after tax dollars.

dmertz

Level 15

Your Form 1099-R is correct as received. A Form 1099-R for a regular distribution from a traditional IRA is required to have the same amount in box 2a as box 1 and box 2b Taxable amount not determined marked. This is because all of your IRA accounts, possibly at different custodians, are treated as one large account for determining the taxability of any distribution and any one custodian has no way to know about any IRA accounts or contributions you might have made at any other custodian, nor does any custodian have any way of knowing whether or not you took a deduction on your tax return for any of your traditional IRA contributions. All of this means that it is entirely your responsibility to report to the IRS and track your nondeductible contributions and entirely your responsibility to determine the taxable amount of any IRA distribution that you receive.

Nondeductible contributions are required to be reported on Form 8606. Each Form 8606 that you are required to file because you made new nondeductible traditional IRA contributions or you received a distribution from a traditional IRA and you have basis in nondeductible contributions will build off of the previous Form 8606 that you filed.

Enter the Form 1099-R into TurboTax exactly as received under Wages & Income -> Retirement Plans and Social Security -> IRA, 401(k), Pension Plan Withdrawals (1099-R). After answering the immediate follow-up questions, click the Continue button on the Your 1099-R Entries page and answer the additional follow-up questions. TurboTax will ask you to enter your basis in nondeductible traditional IRA contributions from your most recently filed Form 8606 (which would/should have been filed in the '90s with your last nondeductible contribution, assuming no distributions from then through 2016) and your December 31, 2017 balance in your traditional IRAs. TurboTax will then calculate on Form 8606 the nontaxable and taxable portions of your IRA distribution.

boshralouka

Level 2

Ok great explanation.

I did that and followed the instructions however.

I'm filing for 2019

I made contributions in 2019 to IRA (after tax money)

the turbotax is asking for form 8606 which I never filed and for IRA contributions on December 31, 2018 which was zero. All contributions were made in 2019 ... how can I avoid paying taxes again on this money?

Thanks for helping!

dmertz

Level 15

If you made a nondeductible traditional IRA contribution for 2018, you must file 2018 Form 8606 to report that, otherwise the IRS does not have to recognize that as having added to your basis in nondeductible contributions. Line 14 of that form will have the amount that 2019 TurboTax is asking for as your basis from years prior to 2019 and will put that amount on line 2 of the 2019 Form 8606 to be used in calculating the taxable amount of your 2019 distribution. If you made a 2019 traditional IRA contribution, you'll need to enter than separately in 2019 TurboTax.

sospisak

Level 2

Glad I found you all! Hope I can join in on this conversation because I am so lost.

I have two 1099’s. The first one was from the 401K of my former employer. I rolled that money over to a traditional IRA (second 1099). This traditional IRA was later converted to a Roth.

So the problem is that it looks like I’m being taxed on both 1099s- the initial from the old employer and the new from the new brokerage.

The most current 1099 (second one) makes sense. I have a distribution code of ‘2’ and the 2A is taxable.

But it’s the first 1099 I’m stuck on. It shows distribution code of ‘G’ which makes sense. But it also shows the same taxable Income in box 2A.

So, my question is, should I have received taxable income (box 2A) on my first 1099 if I rolled that over to the traditional IRA?

I called my former employer, but they said they can’t do anything since the money is no

longer with them.

Please advise.

dmertz

Level 15

The nonzero amount in box 2 implies that code G Form 1099-R from the 401(k) is reporting a rollover from the 401(k) directly to a Roth IRA, which is not what happened. If your requested that the 401(k) perform a direct rollover to a Roth IRA, then the Form 1099-R reflects what you requested and the deposit of this into a traditional IRA was a mistake. If you instead requested that the 401(k) plan make the rollover be to a traditional IRA, the 401(k) plan has improperly prepared the Form 1099-R.

In either case you'll need to file a substitute code G Form 1099-R showing $0 in box 2a and explaining that the rollover was to a traditional IRA, not to a Roth IRA.

The check or transfer for a proper direct rollover specifies the account (or at least the type of account, traditional or Roth) that is to receive the rollover. However, these often do not specify the account, or if they do the specification is ignored, the rollover ends up in the wrong type of account and the Form 1099-R doesn't reflect that the rollover was deposited into the wrong type of account.