Invalid Rollover Question
Hello, I have a client who rolled over $150,000 in June 2021 and they took a distribution in October for $130,000 (Normal Age Based). The client got his 1099R and the distribution code in box 7 was “7”. The client did not realize that the $130,000 was after tax money and their tax adviser is requesting a corrected 1099R showing it’s a bon taxable transaction. I know we can’t correct the 1099R but do you have any thoughts on how he client could work with a tax adviser when filing their taxes?
Any help would be greatly appreciated. Thank you.
Permalink Submitted by Alan - IRA critic on Wed, 2022-03-02 21:27
What account was the rollover from? Most such rollovers are pre tax money, not after tax. The IRA custodian must show all IRA distributions as fully taxable in Box 2a, but that taxable amount is provisional. If client correctly has basis in his IRA, he needs to file Form 8606 to report it, and also report the distribution on Form 8606 in order to generate the correct taxable amount of the distribution of 130k. It’s not clear what you think is invalid regarding the 150k rollover?