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RichM007
Level 1

Inherited IRA and affect on MAGI

Inherited a Traditional IRA from my deceased parent in 2020. I had the company transfer the ownership to my name rather than take the distribution. I then had it moved to an Inhertited IRA Brokeage account at Vanguard. I know of the 10 year rule and also no RMD for my mom was needed in 2020. I received a 1099-R from the original company (in my name) and in box 1 was the total amount, Total Distribution box had an "X", and 2a Taxable Amount indicates $0.00. Box 7, Distribution Code shows 4G, Death and Direct Rollover of Distribution to a Qualified Plan......IRA. My questions are these:

1. Even though this was a direct rollover and no taxable amount, must it be reported on my 2020 return?

2. When I entered into TurboTax it did not affect my refund or payment due I'm assuming because the taxable amount was $0.00. Is this correct?

3. I did notice however, that upon review the amount of this IRA was added to my Total Income, but again did not affect Taxable Income. This is what I'd like to know. If it is reported will it affect my MAGI? Does this transferred IRA rollover, non-taxable amount get put back in to my AGI and bump up the MAGI which will  increase my Medicare payments for my wife and I.

 

Any help is much appreciated

1 Best answer

Accepted Solutions
MinhT1
Employee Tax Expert

Inherited IRA and affect on MAGI

1. Even though your direct rollover is not taxable, you must report the form 1099-R on your tax return. When entering the form 1099-R, follow the interview and say that you rolled over the money to an IRA.

 

2. You are correct. As the rollover is not taxable, it did not affect your ta x liability.

 

3. The rollover is reported as Income, but not as Taxable income or included in your Gross Adjusted Income. It does not affect your MAGI.

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1 Reply
MinhT1
Employee Tax Expert

Inherited IRA and affect on MAGI

1. Even though your direct rollover is not taxable, you must report the form 1099-R on your tax return. When entering the form 1099-R, follow the interview and say that you rolled over the money to an IRA.

 

2. You are correct. As the rollover is not taxable, it did not affect your ta x liability.

 

3. The rollover is reported as Income, but not as Taxable income or included in your Gross Adjusted Income. It does not affect your MAGI.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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