how is disbursement out out of deceased IRA s/b coded?
when assets are leaving deceased IRA to bene IRA, it should be coded as bene transfer both sides. correct?
there s/b no tax reporting on the deceased IRA side. correct?
when assets are leaving deceased IRA to bene IRA, it should be coded as bene transfer both sides. correct?
there s/b no tax reporting on the deceased IRA side. correct?
Permalink Submitted by Alan Spross on Wed, 2010-04-14 18:37
There is no 1099R issued, and no tax reporting for the estate or for the beneficiary. However, a 5498 is issued to the decedent and another to the beneficiary showing the decedent’s name as well as statements of fair market value for RMD purposes.
Permalink Submitted by Shahpar Naghshineh on Wed, 2010-04-14 19:01
I did not know that moving assets from deceased to bene IRA results in a 5498 for RMD purposes.
so there is no 1099R issued. I have a case where there was 1099R issued out of deceased IRA but it was coded as a bene transfer when rcvd into bene IRA. How should the 1099R be corrected ?
Permalink Submitted by Alan Spross on Wed, 2010-04-14 19:13
The 5498 forms apply even if there is no change of account other than re titling of the decedent’s IRA.
The 1099R should be rescinded because the IRS will think this was a taxable distribution. If the custodian will not rescind it, then the beneficiary will have to report it as if it was a non taxable rollover and include a statement and evidence that there was NO distribution made, ie that the 1099R was incorrect and the funds were transferred by a direct trustee to trustee transfer. If the check was made out to the new custodian, that qualifies as a transfer, but if it was made out to the beneficiary, they the 1099R would be correct and the distribution will be taxable. Explaining all this to the IRS will be a hassle, so it would be better to have the 1099R rescinded if the funds really did move by direct transfer.
Permalink Submitted by mk foss on Mon, 2010-04-19 21:09
This year two of my clients who became widows in 2009 received a 1099R reporting the entire amount of the rollover as taxable. Actually they filled in the taxable box but checked the boxes saying taxable amount not determined and total distribution. A code 4 was given for a death distribution but no code G for rollover. One instance was with Merill Lynch and another with Morgan Stanley SMith Barney. In both cases the individual broker thought the reporting was incorrect but they were overruled.
We reported the rollovers as rollovers – I hope that others in the same boat did not pay tax under these circumstances.
Permalink Submitted by Alan Spross on Tue, 2010-04-20 00:23
Well, that’s one way to get their federal bailout money repaid………..let their clients pay it!! 🙂