1099 reporting on rollover
My client was the beneficiary on her Mom’s IRA with Athene insurance company. Her Mom passed in 2019 and we requested a rollover to a Beneficiary IRA in Sept. 2019. The RMD was taken out first before the distribution check was issued and payable to the custodian of the Bene IRA.
The check amount was $28,552.26. For some reason the insurance company issued two 1099’s for this distribution. One, a 1099-R for $27,380.70 with a distribution code of 4. Two, a 1099-Int for $1,171.56. The two amounts equaling the amount of the distribution check of $28,552.26.
I am trying to get an answer from the insurance company on why they issued two 1099’s, but it has been incredibly frustrating to get one. Do you know why they would have issued two?
Thank you.
Permalink Submitted by Alan - IRA critic on Mon, 2021-07-12 21:15
The insurance company appears to be conflating the rules for inheriting an IRA annuity with those for inheriting a NQ annuity. The insurance company should also not have assumed that Mom had not completed her total 2019 RMD from another IRA. And there should not have been a separate interest distribution nor should there have been a 1099R for a direct transfer to an inherited IRA since such IRA to IRA transfers are not reportable.
If mother had no other IRAs and therefore did not complete the 2019 IRA annuity RMD from other IRAs, client would have needed to distribute the 27,381 in 2019 anyway, but the interest could still have been left in the IRA. Since the amount of interest is small, probably easier to just report the 1099 forms as issued. The interest cannot be rolled back to an inherited once distributed to a non spouse beneficiary.