I have inherited a Roth IRA and received 1099 R for the RMD in 2018. Turbo Tax is not asking me about the source (did you inherit the IRA?). Should I be concerned?

[Carl]

What is the code in box 7 of the 1099-R?

[rpmarsh1]

8 and J, Further info: I inherited this Roth IRA in 2018 (less than 5 years old) and the financial institution failed to take out the RMD prior to distribution.  Suspecting there was an error, I contacted them and they took the RMD from the Roth account in Nov 2018 that is now in my name.  The 1099R is for the RMD amount.

[dmertz]

Are you the spouse of the deceased IRA participant?  There seems to be something wrong with the way this situation was handled with the IRA custodian.

Did you receive any other Forms 1099-R related to this Roth IRA?

[rpmarsh1]

no, just this one and my mother (original owner of the Roth) did not get any

[rpmarsh1]

in any case, as the 1099 is currently, it shows $0 as taxable amount

[dmertz]

You should not have received any code 8J Form 1099-R from this inherited Roth IRA.  The custodian has messed something up.

In what year did she pass?

[rpmarsh1]

Yes, she passed in 2018.  Custodian said RMD should have been taken out prior to distribution to beneficiaries and processed it from Roth after in my name.  Used an Edward Jones form "Remove and Excess from an IRA"

[dmertz]

Are you sure that the original account was a Roth IRA and not a Roth 401(k) or similar designated Roth account in an qualified retirement plan?  If this was a designated Roth account in a qualified retirement plan, your mother passed after April 1 of the year following the year she reached age 70½ and was not working for this company at the time of her passing, she would have been required to take an RMD for 2018 and that RMD would have been required to have been satisfied before rolling over the remainder of the designated Roth account to an inherited Roth IRA for your benefit.  In that case, however, you would have received a code 4H 2018 Form 1099-R reporting this rollover.  (Or this could have been a rollover from a traditional account in a qualified retirement plan to a Roth IRA, in which case there would be a code 4G 2018 Form 1099-R.)

If the account she had was indeed her own Roth IRA, there was no RMD requirement for 2018.

[dmertz]

If your mother's account was indeed a Roth IRA, any distribution (for any reason) from the inherited Roth IRA should have be reported with code T or Q as a regular distribution.

[rpmarsh1]

it is definitely a Roth.  I converted it from traditional in Feb 2018 knowing my mothers health and that she would have no tax consequences.  She was 95 when she passed in June

[macuser_22]

Did she take her 2018 RMD amount out of the Traditional IRA prior to the Roth conversion?   No part of a RMD is eligible for rollover or conversion and the RMD amount must be satisfied first before the remainder can be converted.  You cannot convert a Traditional IRA to a Roth and then take the Traditional IRA RMD out of the Roth it must be taken for  the Traditional IRA prior to conversion.

A code 8J would indicate that the box 1 amount was returned as an excess contribution (a RMD converted would be an excess contribution.)

[rpmarsh1]

I think EJ just plain messed up based on what you have said.  As indicated above, my mother did not receive a 1099 for the IRA (traditional or roth) and the form they had me sign (remove excess referenced above) was probably a CYA that got things back in order.  So I am guessing, that I just use Turbo Tax with the supplied code, have no tax liability and move on.

[dmertz · Accepted solution]

Ah, that's how an excess contribution to the Roth IRA occurred and EJ handled the correction properly.  If the RMD for that traditional IRA was not first satisfied by a distribution from a different traditional IRA of your mother's, the first amount distributed from the traditional IRA that was converted to Roth was the RMD for that traditional IRA that was not eligible for conversion to Roth.  Because it was not eligible for conversion to Roth, it became an excess contribution in your mother's Roth IRA.  That excess remained in the IRA when it was transferred to an inherited Roth IRA for your benefit, so it's proper that it was distributed to you as a return of excess contribution.

When preparing your own tax return, simply enter the Form 1099-R as received.  There is no need for TurboTax to know if the distribution was from an inherited Roth IRA or not.

[dmertz]

Note that the code 7 Form 1099-R reporting the amount converted to Roth is reportable on your mother's 2018 tax return.  However, only the amount in excess of her RMD is to be entered as the amount converted to Roth (although it doesn't really make any difference since the entire amount is includible in income anyway and her Roth conversion basis is no longer relevant to preparing her tax returns since her 2018 tax return is her last).