Sale of stock held in an IRA
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Returning Member

Sale of stock held in an IRA

I have a Traditional IRA.  I sold some stock in 2019 but reinvested it in another stock within this IRA shortly thereafter.  Why would I receive a 1099-R for the sale of the stock?  I did not take a distribution from this account, but Federal Income Tax was withheld.

2 Replies
Level 15

Sale of stock held in an IRA

Apparently the financial institution treated it as a rollover rather than just share transactions within the IRA. You will have to enter the 1099-R on your tax return and unfortunately the amount of the federal withholding will be treated as a distribution and is taxable.  There was apparently a misunderstanding between you and the financial institution about what you were trying to do.  Rather than take a distribution you should have had a direct rollover of the full amount to the other stock. To be a rollover, you had to reinvest the funds within 60 days of when you took the distribution. 

 

When entering the amount of the rollover, you can only include the amount rolled over less the amount of federal tax withheld unless you invested funds from another source to make up the difference. 

Level 15

Sale of stock held in an IRA

If the transaction is as you described, with neither the stock nor the cash proceeds from the sale of the stock leaving the IRA, there should be no Form 1099-R.  Contact the IRA custodian for an explanation or a correction.

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