1009-R Box 4 Distribution with Taxes withheld

[k7jw]

My father's death benefit from an employer pension was reported on a 1099R with Distribution Code 4 in Box 7.  There was 10% tax withheld, and the TIN is my own SSN.  However, his trust was the beneficiary -- it has it's own EIN.  So I have two problems: 1) the recipient's TIN is mine, not the trust's; and 2) there seems to be no way in form 1041 to report the 10% tax withheld.  

[RobertB4444]

You should contact the pension management company and request a corrected 1099-R for the trust.  They may or may not be willing to work with you - hopefully they will because that's the easiest way to handle it.

The other way is to enter the 1099-R into the trust return as though it had the correct EIN on it.  Then, you'll have to paper file the return along with a copy of the 1099 and a letter detailing the correction.  This is undesirable because it will probably lead to a letter to you for not including it on your personal return and will significantly delay processing of the trust return.

The third way is the easiest but still not great.  Include the income on your tax return and then reimburse yourself from the trust for the taxes you paid if there are any over and above the with holding, or reimburse the trust if the withholding results in a refund for you.  This one involves doing the math to figure out exactly which portion of your taxes was incurred by the 1099 and whether that resulted in an out of pocket expense for you.

Whichever method you choose you should double check with the pension folks.  Anyone is allowed to name a beneficiary to their insurance or bank account or pension so that any benefits go directly to that person in the event of their death and skip probate.  Make sure that wasn't something your father set up for you.

@k7jw 

[k7jw]

Thanks, that's basically what I was thinking I needed to do.  I forgot to add that my sister is also a beneficiary, and I have already distributed her half to her.  This makes it somewhat more complicated to file it on my own taxes, but since she is more than willing to let me handle all of the accounting, I would just be able to settle with her regarding my increased taxes for reporting the whole amount.  But before doing that, I will attempt to contact the pension plan administrator.  Thanks again.