Husband passes in 2020 with a traditional IRA. Wife is the beneficary of his IRA. She has her own tradition IRA

Submitted by Linton Banwell on Mon, 2022-11-21 20:59

The code in Box 7 of the 2021 1099R is 4. The 2021 5498 show the proceeds being deposited into the spouse’s traditional IRA. The issue is the wife’s 2021 1040 has included the traddition IRA proceeds as income for 2021. How do we fix this mistake?



Submitted by David Mertz on Mon, 2022-11-21 21:52

  • Assuming that the entire gross amount was rolled over (and was eligible for rollover), the gross amount of the distribution (box 1 of the Form 1099-R) should be included on Form 1040 line 4a but excluded from line 4b. The notation “ROLLOVER” should be next to line 4b.  If the 2021 tax return was filed with any of the rollover being included on line 4b, an amendment of the tax return is necessary to obtain a refund of excess taxes paid.
  • To avoid any reporting at all, a surviving spouse assuming ownership of a deceased spouse’s IRA should move the funds by non-reportable trustee-to-trustee transfer instead of by distribution and rollover, that that apparently did not happen in this case.

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