1099R

[hlabate]

my Credit Union states that my 1099R for IRA MRD is correct for an indirect rollover with in 60 days from and to the same IRA account but reports the gross distribution as the taxable amount in block 2a while taxable amount not determined is checked in block 2b.  Block 7 lists code 7.  Federal tax was withheld in block4.

I can not report this way since reporting an indirect rollover with other than zero in block 2a will raise taxable income incorrectly.  should I change block 2a to zero and or change block 7 to code G for rollover?

[dmertz]

The form 1099-R provided by the credit union is correct.

Delete and reenter this Form 1099-R exactly as received.  Do not modify the amount in box 2a or the code in box 7.  When asked, indicate that none of the distribution was RMD, indicate that you moved the money to anther retirement account or returned it to the same account, then indicate the amount that was rolled over.

[hlabate]

I believe that I solved the issue.  I found IRS info that allows filer to change the code if he deems it incorrect and has made attempts to get it corrected.  Thus I changed it to a roll over code which would not then consider it taxable and I provided an explanation. 

All is good so .far

[RaifH]

Please note that if this was a Required Minimum Distribution (RMD) from your credit union, it is not eligible to be rolled over. According to the IRS, "Amounts that must be distributed (required minimum distributions) during a particular year aren't normally eligible for rollover treatment." There was an exception to this for the tax year 2020 due to the pandemic, but there is no exception in 2021. 

If this is not an RMD, please report it as @dmertz outlined above. That will avoid taxation on any of the amount you rolled over as an indirect rollover as long as it was put back in the account within 60 days of receipt. 

[dmertz]

Except that code provided by the payer is correct, so it's improper to file a substitute Form 1099-R (Form 4852) to change the code.

Since this distribution was originally intended to be an RMD (a requirement that was eventually waived for 2020), the distribution was paid to you.  It's impermissible to use code G for such a distribution because the distribution was not paid by the IRA custodian directly to an employer plan such as a 401(k).  All that was required in 2020 TurboTax was to indicate that none of the distribution was RMD (because it was no longer an RMD after RMDs were waived) and to indicate that the distribution was rolled over.

Still, the taxable result is the same whether you report the code-7 distribution as rolled over or you use code G.  However, if there was tax withholding on the Form 1099-R, that causes a reporting problem because a code-G Form 1099-R cannot have any tax withholding and the presence of tax withholding forces TurboTax to include in your e-filing the details of the Form 1099-R, including the erroneously selected code G.

Now if you are instead talking about a 2021 Form 1099-R that you are entering in to 2021 TurboTax, as @RaifH said, 2021 RMDs are ineligible for rollover.