1099 R for deceased taxpayer's IRA


M

mammondee

The deceased taxpayer was a 80 year old widow taking minimum required distributions from her $200K IRA. Upon her death, and at the request of the executor of her will, the IRA was rolled into equal inherited IRA's for her four beneficiaries.

The 1099 reads as follows:

box 1 Gross distribution: $200,000
box 2a taxable amount: $200,000
box 2b taxable amount not determined: Y
box 2b total distribution: Y
box 7 distribution code: 4
box 8 IRA/SEP/SIMPLE: Y

It seems to me box 1 is corrected, but box 2 should read $0, and box 7 should be code 4G

Am I correct, and if so, should I ask the bank to send a corrected 1099R?

If they will not send a corrected 1099R, I guess I will simply "override" my software to show $0 taxable, and hope the IRS sends no correspondence to us!
 
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A

Alan

The deceased taxpayer was a 80 year old widow taking minimum required distributions from her $200K IRA. Upon her death, and at the request of the executor of her will, the IRA was rolled into equal inherited IRA's for her four beneficiaries.

The 1099 reads as follows:

box 1 Gross distribution: $200,000
box 2a taxable amount: $200,000
box 2b taxable amount not determined: Y
box 2b total distribution: Y
box 7 distribution code: 4
box 8 IRA/SEP/SIMPLE: Y

It seems to me box 1 is corrected, but box 2 should read $0, and box 7 should be code 4G

Am I correct, and if so, should I ask the bank to send a corrected 1099R?

If they will not send a corrected 1099R, I guess I will simply "override" my software to show $0 taxable, and hope the IRS sends no correspondence to us!
1. I don't understand why the 1099-R says $200K, when you stated that
the decedent's IRA was rolled over into 4 separate IRAs of the
beneficiaries. I will assume you meant to say the gross distribution for
each of the 4 beneficiaries was $50K. If not... then to whom was the
$200K 1099-R issued?

2. It is my understanding that trustee-to-trustee transfers from one IRA
to another IRA do not get reported.

3. If the 1099-R was issued with Code 4, I have to believe that the
trustee distributed equal amounts to the 4 beneficiaries who then
deposited the amount into their own "Inherited IRA" within the requisite
60 day period.

As such, the 1099-R with $50K is coded correctly. The beneficiary
reports the gross of $50K and taxable of zero. The software I use has an
exclusion worksheet below the 1099-R form, where one enters the amount
rolled over. The software then places the word Rollover on Line 15 of
the 1040.
 
D

D. Stussy

mammondee said:
The deceased taxpayer was a 80 year old widow taking minimum required
distributions from her $200K IRA. Upon her death, and at the request of
the executor of her will, the IRA was rolled into equal inherited IRA's for
her four beneficiaries.
The 1099 reads as follows:

box 1 Gross distribution: $200,000
box 2a taxable amount: $200,000
box 2b taxable amount not determined: Y
box 2b total distribution: Y
box 7 distribution code: 4
box 8 IRA/SEP/SIMPLE: Y

It seems to me box 1 is corrected, but box 2 should read $0, and box 7
should be code 4G

Box 7: "4" means death. Such is sufficient. Some software only allows
one code.

Box 2: Well, that's going to depend on how the rollover was performed.
However, it is incorrect to have both Box 2a with a dollar amount and 2b
with yes.

- If it were performed "in house" with other accounts at the same
custodian, then I agree it should be zero.
- If it were performed by a distribution which went through the
beneficiaries' hands, then it should be determined and not zero.
- If it were performed by a direct custodian-to-custodian rollover, it's
going to depend on the instructions given to the decedent's custodian. Did
they know it was another custodian that was receiving the amounts?
Am I correct, and if so, should I ask the bank to send a corrected 1099R?

If they will not send a corrected 1099R, I guess I will simply "override"
my software to show $0 taxable, and hope the IRS sends no correspondence to
us!

On whose return(s)? The 1099-R appears to be issued post-death under the
decedent's TIN. There is no matching tax return to report such.

Just be glad that the bank marked box 7 with a "4."
 
P

Phil Marti

The deceased taxpayer was a 80 year old widow taking minimum required distributions from her $200K IRA.  Upon her death, and at the request of the executor of her will, the IRA was rolled into equal inherited IRA's for her four beneficiaries.

The 1099 reads as follows:
By now it should be clear to everyone that the 1099-R was erroneous
and that no 1099 should have been issued to anyone. If the bank won't
correct it just report it on line 15 with a zero on 15b and be done
with it. Tell the executor to hang on to the paperwork in case
there's an inquiry during underreporter. It won't be the first bad
1099-R the IRS has seen.

Phil Marti
VITA/TCE Volunteer
 
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G

Guest

Phil Marti said:
By now it should be clear to everyone that the 1099-R was erroneous
and that no 1099 should have been issued to anyone. If the bank won't
correct it just report it on line 15 with a zero on 15b and be done
with it. Tell the executor to hang on to the paperwork in case
there's an inquiry during underreporter. It won't be the first bad
1099-R the IRS has seen.

Phil Marti
VITA/TCE Volunteer
I agree with Phil. The trustee should have ensured that the owner's MDIB was
made for the year. If not, they should have made it and distributed the
proceeds to the designated beneficiaries. The only 1099-R for 2010 should
have been for the original owner's 2010 distribution. The remainder should
have been transferred to (non-spouse?) beneficiary IRAs, which the
beneficiaries have to begin taking minimum distributions beginning the year
after death based on the new Table 1 in IRA Publication 590. They do not get
to recalculate each year, but instead use the factor based on the decedent's
and beneficiary's age in the Table, then reduce that by 1 each year. Also,
beneficiary IRAs are supposed to be titled in the name of the deceased FBO
<beneficiary's name>, beneficiary. Distributions are made using the
beneficiary's SSN.

"Other designated beneficiary. Use the life expectancy listed in the table
next to the beneficiary's age as of his or her birthday in the year
following the year of the owner's death, reduced by one for each year since
the year following the owner's death." (pg. 36)

Of course, beneficiaries can withdraw any amount more than the RMD they
want, and report it as ordinary income. I presume the IRA had no cost basis
(non-deductible contributions) to complicate things.


.......................................................................................
"The center of the universe always is someplace else."
 

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