Relief of Unwanted 09′ RMD’s
With the IRS Notice 2009-82, concerning the relief of unwanted 09′ RMD’s…Question concerning how the ‘Trust’ companies report the distributions…Is it simply a matter of the trust company involved adjusting the overall amount involved for the year ? Or do they report the total amount distributed and then whatever was put back is treated differently, like a ‘rollover contribution’ ?
Permalink Submitted by Alan Spross on Tue, 2010-02-09 18:28
The latter. The 1099R is issued as usual for the distribution, and a 5498 reports rollover contributions. This dovetails with the fact that the taxpayer is not allowed to roll the funds back to an IRA if they have already used up their one permitted rollover within 12 months.
Permalink Submitted by Gregg Guiol on Tue, 2010-02-09 19:12
Alan –
Thanks for the quick response and answer as always…
Much appreciated !!!
Gregg Guiol
Permalink Submitted by Gregg Guiol on Wed, 2010-02-10 21:46
Alan –
Sorry but one additional question concerning how this works…
What if the client involved took an RMD distribution in securities and in doing that, the securities would be valued at the time of distribution. So in this case, the distribution was done back in Jan 09’…When the securities were put back (or rolled over) with the ‘Relief’ act, that occured in Oct 09′, and the market and value of those positions would be different than when the distribution actually took place earlier in the year…
What is done concerning the differential in the valuations, for reporting purposes ?
Thanks –
Gregg Guiol
Permalink Submitted by Alan Spross on Wed, 2010-02-10 22:41
Gregg,
Nothing would be done. The value at distribution would be reported on a 1099R and rollover would be entered next to line 15b on the return showing nothing taxable on line 15b. The same assets were rolled back as were distributed. The 5498 issued to reflect the rollover contribution would indeed have a different value, but the IRS is used to these values being different and time there is an in kind rollover. Even more so given the long period of time these shares will spend outside the IRA, up to 11 months as a maximum.
Alternately, the shares could be sold at any time and the cash received could be rolled over. For the sale, no gain or loss is recognized, and no reporting is done on Sch D to report the sale since the assets are considered rolled over.
What cannot be done is to substitute cash to complete the rollover and keep the shares.
This obviously gets complex if you receive both cash and shares in a distribution and choose to roll over parts of each. This can be done, but any property that is in fact rolled over must be the same property that was distributed or the cash proceeds for the sale of that property.
Permalink Submitted by Gregg Guiol on Thu, 2010-02-11 13:46
Alan –
Thanks – That clears that up perfectly…
As always, I really appreciate your assistance…
Gregg Guiol