1099 coded incorrectly

Submitted by Lewis Young on Tue, 2020-02-18 15:54

client requested funds to be transferred from her Traditional IRA to the state of LA retirement system to buy back into the retirement system. They sent a letter of acceptance and the check was made payable to them fbo client. The custodian coded as distribution 7 . The CPA does not know what to do . Can this be written in somewhere on the return with copies of the acceptance forms , check, etc..? Thanks



Submitted by Alan - IRA critic on Tue, 2020-02-18 16:53

  • The 1099R should have been coded G, but it is reported in the same manner with Code 7 (60 day rollover) as with Code G. The gross rollover check amount goes on line 4a with 0 on 4b and “rollover” on the line next to 4b. Client’s tax return must also include an explanatory statement showing the date and amount of the rollover and the name of the receiving plan because the LA system does NOT issue a 5498 reporting a rollover contribution. That is all that is required, and I assume there was no withholding taken out of the rollover check and the check did not include any IRA basis, which cannot be rolled over.

Submitted by Lewis Young on Tue, 2020-02-18 18:19

Saved the day once again! Thank you 

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