Roth to Roth transfer

Forum|Forum|5 years ago
February 26, 2021
1 reply
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Many years ago I opened a Roth IRA at Us bank and after 3 years my advisor suggested we transfer it to and annuity at Allsate to get a better interest rate. I said yes if you think that would be a investment. So a Roth to Roth transfer was done. Over the years I did most of my investing thru my employer so never contributed any more money into the account. About 8 months ago since I was 61 I decided to remove the money to help buy a new car. I assumed it was a Roth since that is what I set up and signed to have set over to Allstate. A few weeks ago I received the 1099R and it stated the distribution was from a trad IRA and at the taxable amount was the entire balance that was sent over a Roth. I called the bank and they have the paperwork that clearly states this was a Roth to Roth transfer and on the transfer agreed to place the funds in a Roth. Called Allstate and they are saying the application only stated a trad ira transfer, even though I have the paperwork in front of me. I faxed this info to them and asked for a corrected 1099R. My question is since this happened many years ago are they obligated to make the change?? It was all post tax money as I have the records of my contributions. If they will not make the change how do I file my taxes??? can I sent a copy of the application to the IRS??? what are my options...anyone have and opinion...

macuser_22

Alumni - Champ

Was this a direct trustee-to-trustee transfer from the original Roth?

Did you receive a 1099-R at the time of the transfer? If so what was in box 7 and 2a and was the IRA/SEP/SIMPLE box checked?

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

irishguy789Author

Level 2

It was 100% a direct trustee to trustee transfer. I have that fax that I got from US Bank. I do not remember if I received a 1099R at time of transfer. The paperwork that I got from Us bank clearly shows it was a Roth to a Roth transfer. The transfer sheet from the Allstate clearly states that they received the funds and that it was going to be transferred to a Roth there. This was years ago and I never did make any more contributions to that particular account. I assumed it was a Roth all these years but when I made a distribution in 2020 I just recently received a 1099R that showed it to be a trad IRA distribution. In box 7 it showed the code 7 so I called them and they said it was sent over as a trad roth to trad roth transfer, but the paperwork that was filled out by US bank and signed by myself clearly states it was a Roth to Roth and they accepted it as such and stated they would place it in that account only. But that did not happen. I did fax the original contract to them yesterday but I am not sure how they will receive or if they will sent me a corrected 1099R since it has been many years since it was sent to them. My only concern now is since tax season is 6 weeks away how do i file my taxes if they won't update the 1099R. It was clearly set up with post tax money as a ROTH. Can I send the IRS copies of the whole transaction and file as if it was a Roth distribution??? that is what is worrying me the most is the tax implications of this mess. I hate to pay taxes twice and than pay tax on the gain. I am not sure what is my best move. Any advice would be helpful and very appreciative.

macuser_22

Alumni - Champ

@irishguy789 wrote:

It was 100% a direct trustee to trustee transfer. I have that fax that I got from US Bank. I do not remember if I received a 1099R at time of transfer. The paperwork that I got from Us bank clearly shows it was a Roth to a Roth transfer. The transfer sheet from the Allstate clearly states that they received the funds and that it was going to be transferred to a Roth there. This was years ago and I never did make any more contributions to that particular account. I assumed it was a Roth all these years but when I made a distribution in 2020 I just recently received a 1099R that showed it to be a trad IRA distribution. In box 7 it showed the code 7 so I called them and they said it was sent over as a trad roth to trad roth transfer, but the paperwork that was filled out by US bank and signed by myself clearly states it was a Roth to Roth and they accepted it as such and stated they would place it in that account only. But that did not happen. I did fax the original contract to them yesterday but I am not sure how they will receive or if they will sent me a corrected 1099R since it has been many years since it was sent to them. My only concern now is since tax season is 6 weeks away how do i file my taxes if they won't update the 1099R. It was clearly set up with post tax money as a ROTH. Can I send the IRS copies of the whole transaction and file as if it was a Roth distribution??? that is what is worrying me the most is the tax implications of this mess. I hate to pay taxes twice and than pay tax on the gain. I am not sure what is my best move. Any advice would be helpful and very appreciative.

A trustee-to-trustee transfer will not generate a 1099-R normally but some trustees issue one anyway.

It is a violation of Federal tax law for a trustee that receives after-tax dollars in a transfer to place that into a Traditional IRA - it can ONLY go into Roth. After-tax money can never be rolled into a Traditional IRA, that is not permitted.

You need to escalate this with the receiving institution or to their legal department.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**