The plan administrator has to give you a corrected Form 1099-R. Contact them as soon as possible.
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?
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.
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.
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!
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.
Hope I'm allowed to join this 1099-r discussion. I received a 1099-r from my credit union for two normal distributions taken on my traditional IRA. I had tax withheld on one but not on the other. The 1099-r provided shows "0" in box 2a which causes TurboTax to recognize the distribution as " a prior year excess contribution" and TurboTax does not include the distribution in my taxable income. I believe the box 2s should have been left blank. I contacted the institution and requested a corrected 1099-r but they don't really seem to understand the issue nor do they believe the 1099-r is incorrect because "their system puts 0's in blank fields". In order to make the software correctly report this normal distribution, I have to leave box 2a blank which is inconsistent with my 1099-r. Is this a problem for me?
A Form 1099-R reporting a regular distribution from a traditional IRA must always have box 2a equal to box 1 and box 2b Taxable amount not determined marked.
PalmTree, what is the code in box 7 of the Form 1099-R?
Is the IRA/SEP/SIMPLE box marked on the form provided by the payer?
Is box 2b Taxable amount not determined marked?
You are correct, the payer has provided an incorrect Form 1099-R. Box 2a should have the same amount as box 1 as required by the instructions for Form 1099-R for this type of distribution. I can't imagine how the payer could have made such a mistake unless the form was manually prepared, which would be odd if there was nothing unusual about the distributions. An automated system should not have permitted such an error.
I would contact the payer again and escalate to someone there who actually knows what they are doing.
I agree. I told the branch manager yesterday that I'm contacting their board of directors... ha. Thanks again
You could also contact the IRS as indicated in IRS Tax Topic #154:
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.
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.
Here is my my suggestion as a tax professional. Enter the 1099-R as it is recorded. Then offset the income by doing this.
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.
queenvic8940, your Form 1099-R is correct. On your tax return you need to report as a rollover the amount repaid. To do so you must delete any entry you have already made of this Form 1099-R, enter the Form 1099-R exactly as received, indicate in the follow-up that none of the distribution was an RMD, then indicate the amount moved back to the IRA as a rollover.
DaveF1006's approach works in many, but not all cases because your tax return still shows a retirement distribution despite the distribution being undone by the repayment. The presence of the distribution can impede TurboTax's ability to properly calculate a Retirement Savings Contributions Credit for some of those who qualify. Reporting the repayment as a rollover avoids any such negative side-effects.
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.
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.
Wow. Thank you so much for explaining that so well!
How do I file a substitute code G form 1099-R? Do I just find a blank 1099-R and fill it out and make a comment at the end of the form?
When entering the 1099-R into TurboTax, TurboTax has a checkbox to mark to indicate that you need to file a substitute Form 1099-R. In the CD/download version of TurboTax it's on the Tell Us Which 1099-R You Have page. In online TurboTax its on the Do any of these situations apply to you page. Enter $0 in box 2a, leave everything else the same, mark the checkbox, then enter your explanations.
Thank you so much @dmertz for your help. You have saved me from a major headache. Have a wonderful 🙂
I have an Annuity that was funded with after tax money. Every year I have gotten a 1099-R which shows the amount distributed that year. In box 2a it shows no amount. Box 7 shows 7D.
This year they put the same amount in 1 and 2a. What to do, I should not have to pay taxes on the distribution as taxes have been paid. They have done it OK for the last 6 years.
@Cowtech , is this a deferred annuity that has not yet been annuitized? If so, it's possible that in past years that the balance to your credit was less than your investment in the plan and your distributions consisted entirely of a return of part of your investment in the plan and this year there was a gain in value of more than the amount distributed and therefore distributions were a distribution of taxable gain instead. When distributions are made before the contract has been annuitized, taxable gains come out first and only after all of the gains have been distributed do distributions consist of a return of your investment in the contract.
Is box 2b Taxable amount not determined marked?
Was box 2b Taxable amount not determinedin the past?