My husband died in 2015. I rolled his 401K into my IRA in 2020 and then took a distribution from this IRA. When I enter the 1099-R in TT it asks if it was inherited. Do I say yes?
Yes, because you were your husband's beneficiary, it is an inherited IRA.
If you inherit a traditional IRA, you are called a beneficiary. A beneficiary can be any person or entity the owner chooses to receive the benefits of the IRA after he or she dies. Beneficiaries of a traditional IRA must include in their gross income any taxable distributions they receive but there are special rules if you inherit from your spouse.
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If there is no code 4 in box 7 of this Form 1099-R, it is NOT an inherited traditional IRA.
Your own IRA is your own IRA, not an inherited IRA even though you rolled over funds to it from the 401(k) that you inherited from your husband. Distributions from an inherited traditional IRA maintained for the beneficiary of the IRA owner are reported with code 4.
We received an inherited from a non-spouse relative, and it is a very specific account that must be kept separate to maintain its status. I would think a spouse wouldn't have a separate inherited IRA account if you say it was rolled over into your account. It would lose its identification. This is just my opinion. When researching inherited IRA account, I did find some websites that were helpful by just doing a search.
When you are in the screens for entering your inherited retirement distribution there is a screen that asks what your situation is for this Form 1099R. An inherited distribution is not subject to the 10% early withdrawal penalty if you are under 59 1/2 years of age. Also check your code in Box 7.
Here's how to enter your 1099-R in TurboTax:
- Open (continue) return if you don't already have it open.
- Inside TurboTax, search for 1099-R > press enter and select the Jump to link in the search results. (be sure to use the dash)
- Answer Yes on the Your 1099-R screen, then select Continue.
- If you land on the Your 1099-R Entries screen instead, select Add Another 1099-R.
- Select how you want to enter your 1099-R (import or type it in yourself) and then follow the instructions.
- You can add up to 20 1099-Rs.
- You will come to the screen that asks 'Do any of these situations apply to you?' Make your selection here.
- See the image below for assistance