Hello:

I posted this yesterday and appreciate the reponses. One other issue, what to do on the California side. 1099R issued showing taxable IRA distributions. Does not seem right that should be taxed since no prior deductions and was a mistake and taken out. Feds have the excise tax but California does not – any help???

I am wondering if I can get some guidance regarding a particular situation – I have a client that deposited 175K into an IRA in 2007 marking rollover contribution. However, the money was not a rollover but from a nontable legal settlement. During 2007 she pulled out 30k and received a 1099R with box one checked no known exceptions under 59 1/2. In 2008 she pulled the rest out and was told by the bank that she would receive another 1099R in 2009 for 2008 distributions with box one checked.

I am wonderig how to clear this up since really a mistake and never should have been deposited into IRA and 1099R if anything should have reported as excess distribution code.

Any help would be appreciated.

Thank you.