IRA rollover
IF A BANK DIRECT TRANSFERS AN IRA TO ANOTHER BANK, DOES THAT HAVE TO BE SHOWN ON YOUR TAX RETURN AS A ROLLOVER? THE BANK SAYS IT DOES NOT, BUT I QUESTION THAT ANSWER?
IF A BANK DIRECT TRANSFERS AN IRA TO ANOTHER BANK, DOES THAT HAVE TO BE SHOWN ON YOUR TAX RETURN AS A ROLLOVER? THE BANK SAYS IT DOES NOT, BUT I QUESTION THAT ANSWER?
Permalink Submitted by Alan Spross on Fri, 2008-06-20 00:06
The IRA custodian should not issue a 1099R reporting a direct transfer and therefore the IRS is not looking for anything from the taxpayer to show that the funds were rolled over.
Rarely, an IRA custodian may report this on a 1099R in error. If the taxpayer gets a 1099R, then they must report this on their return as a rollover if they cannot get the 1099R rescinded, however they should also attach an explanatory statement and evidence that the transfer was actually direct and should not be counted as a rollover. Simply showing it as a rollover means the IRS rules do not allow another rollover for 12 months, and that restriction should be avoided to keep all options alive.
Bottom line, unless you get a 1099R for the transfer, you can forget it. If you get one, try to get it rescinded, and if that does not work, then you will have to report it on line 15 of Form 1040 per above.
Permalink Submitted by James Dyer on Fri, 2008-06-20 01:55
Thank you very much for the answer. When you say no more rollovers for 12 months, does that mean on that specific IRA, or no more period, if I have more than one?
Permalink Submitted by Alan Spross on Fri, 2008-06-20 05:17
No more on either an IRA from which a rollover is made or one which receives a rollover. Other IRA accounts you may have can have a rollover distribution. Again, direct transfers can be totally ignored in considering rollover limitations.