Duplicate 1099-Rs??
I’m the beneficiary of my brother’s qualified retirement plan that was transfered to an inherited IRA at Schwab last May. I received a letter from the former plan holder in October that $4k was in excess of IRS limits under code section 415. I had Schwab mail me a check for the $4k. I checked the “withdrawal of excess contribution” box as instructed and the amount of $4k on their IRA distribution request form. In December I took another distribution of $50k.
OK..just received my 1099-rs. The first is from the former plan holder with a taxable distribution of $4k..code E in box 7(excess annual additions). Now, what has me confused is that Schwab’s
1099 has a gross distribution of $54k, all taxable, code 4(death). Isn’t the IRS going to assume that I received $58k in distributions all taxable, when I actually received only $54K? Is someone in error? IF so, who?
Permalink Submitted by Alan Spross on Sun, 2008-02-03 06:49
Schwab should have issued a separate 1099R for the distribution of the excess contribution, but they probably mishandled your distribution request and coded it as a normal distribution. The plan 1099R is correct with the Code E.
Rather than spending the time to try to get Schwab to correct this, you could simply report the plan 1099R info on lines 16a and 16b as taxable income.
Then, on line 15a show 54,000 and on line 15b show 50,000 as the taxable amount and show “per statement attached”. On the statement explain what happened and that you are correcting the excess contribution due to incorrect rollover information per p 51 of Pub 590, where it indicates that amounts should not be included in income that were excess due to incorrect rollover information. Attach a copy of the 1099R with the E code to this statement and explain the chronology.
I assume that any RMD requirement was covered by the 50,000 portion of the distribution.
Permalink Submitted by gregg peckham on Sun, 2008-02-03 18:33
[quote=”[email protected]“]Schwab should have issued a separate 1099R for the distribution of the excess contribution, but they probably mishandled your distribution request and coded it as a normal distribution. The plan 1099R is correct with the Code E.
Rather than spending the time to try to get Schwab to correct this, you could simply report the plan 1099R info on lines 16a and 16b as taxable income.
Then, on line 15a show 54,000 and on line 15b show 50,000 as the taxable amount and show “per statement attached”. On the statement explain what happened and that you are correcting the excess contribution due to incorrect rollover information per p 51 of Pub 590, where it indicates that amounts should not be included in income that were excess due to incorrect rollover information. Attach a copy of the 1099R with the E code to this statement and explain the chronology.
I assume that any RMD requirement was covered by the 50,000 portion of the distribution.[/quote]
Thanks…Schwab coded the entire $54k as 4(death). I believe the $4k should have been coded 8.