My mother passed away this year. Both she and my father, who passed away 6 years ago, were teachers in Missouri and were covered by the Public School Retirement System. Because they were not teachers in public schools, when they reached retirement age, they were not eligible for full retirement benefits, so they contributed taxed dollars to the system to "buy up" benefits. While living they received benefits and part of the benefit was not considered taxable. The non-taxable amount was provided in box No. 5 and in box No. 7 the code 4 (death) for my father (since he passed away 6 years ago) and code 7 (normal distributions). For the year 2018, the 1099 R's were received completed in the same way as prior years. I have no questions on the tax treatment of this.
However, following the death in 2018 of my mother, the PSRS sent to my mother a second 1099 R with amounts only in box 5 and box 7 with a code 4 (death). There were no amounts in any of the other boxes. the 1099R was NOT checked as corrected.
So, my question - how do I treat this 1099R for filing my mothers final tax return. When I enter the 1099R in the turbo tax software, it essentially ignores it. So, if it's ignored, why would we receive a 1099 R? What I am wondering is if I the amount on this second 1099R can be the amount of "after taxed paid up contributions" that had not been previously distributed and, therefore, can be netted (reduced from) the taxable amount shown on the first 1099 R?
First 1099R gross distribution $40,000 (both mom and dad's added together)
First 1099 R taxable amount $39,000
First 1099 R Emp Aftr tax cont $1,000
Second 1099R gross distribution $-0- (both mom and dad's added together) Second 1099 R taxable amount $ -0- Second 1099 R Emp Aftr tax cont $20,000
Can I report taxable as $39,000 less $20,000, or $19,000?