1099-R Rollover

[macuser_22]

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@JLP1976 wrote:

@macuser_22  t Also, Windows or Mac?

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Mac  desktop, but I am sure the Windows desktop works the same way.

(I will report this to the Moderators so the different behavior of online and desktop can be investigated and the online version needs to have a way to roll back inherited RMD's.)

[JLP1976]

This is curiouser and curiouser. I spoke to a customer service rep and, in the process, stumbled onto something. I had been using a record brought in from last year's TT file. As I went through the entries online with the rep, I showed her that if I change the distribution code from 4 (Death) to 7 (Normal Distribution), everything works as expected. Then I created a new 1099-R as just to show her every step. When I got to the page that asks if there are any uncommon situations, I had selected: I inherited this IRA. She stopped me and told me to select None of these apply. When I did, the rollover screen appeared at the end. Oddly enough, though, when I made the same change on my original 1099-R record, nothing changed. She said I did not need to choose "I inherited this IRA" because I had already entered the distribution code 4. This is not very clear to the user.

[macuser_22]

A code 7 is *your* IRA and NOT an inherited IRA, so the interview will be different -  that might work as a workaround UNLESS there is an amount of Federal tax withholding in box 4.   Then the IRS will receive a copy of what you entered for the 1099-R and entering a code 7 in place of a code 4 is sure to receive an audit letter from the IRS.  (If nothing in box 4, then  ONLY the 1040 is sent to the IRS and not the 1099-R that you entered.)

[JLP1976]

I was probably not clear in my notes. I only used 7 as an example to show the rollover screen that should come up at the end. When I created the clean 1099-R, I used 4 and None of the above I got the same rollover screen. The only workaround in this whole mess is that one may need to create a "clean" 1099-R and do not select "I inherited this IRA" if you want to see the rollover screen at the end. You are quite right to point our that all of the entered information must be consistent with what is sent to the IRS.

[victor15]

I have the same issue. But when I click "none of these apply" I still don't get the rollover screen. Ugg kind of at a loss right now

[dmertz]

victor15, if you previously indicated that the distribution was an RMD, be sure to delete and reenter the Form 1099-R, otherwise TurboTax will not treat the distribution as eligible for rollover.

[victor15]

Ok I had to delete and then re enter the 1099. It worked just fine.  Thanks everyone!!

[kewh]

Agree with JLP1976 and Macuser_22 that the second half of the TT screen did not display when I completed my 2019 tax return on the 2019 CD/download version of TT. Future users will appreciate a software fix.

I started this thread while working on my 2019 tax return. (The RMD was required in that pre-pandemic tax year.)  I inherited my father's 401K, collected the RMD (a taxable fraction of the total 401K), and rolled the balance into a tax-deferred "Inherited IRA" with a licensed financial planner. I received separate 1099-R forms for the RMD and the roll-over balance. TT entry for the RMD 1099-R was clear, but entry choices for the rollover 1099-R were confusing and incomplete. I had to monkey with the forms behind the scenes, and it took me hours of research and trial to figure out what TT should have led me through with the right labels and choices.

Each year I will receive the RMD and pay taxes on that amount. It was only in the 2019 tax year that I needed TT to give me clear interview steps for recognizing the tax-deferred roll-over.  I guess Dawn and others have said it comes down to the codes, but TT didn't guide me in a way that fit the non-spouse inherited retirement money situation.

(As a side lesson for families: try to avoid roll-overs in your base year for college financial aid applications. In 2013 my husband rolled his 401K into an IRA because his employer was eliminating the 401k plan. Even when the money moves from one retirement account to another (didn't even touch our hands), it gets entered on 1040 lines that are picked up as income on the FAFSA (fin aid app for college) and it looked like we had more income than we did. Ouch!)