Reporting requirements: auto-deposit made to deceased customer’s IRA
This question is regarding the reporting requirements for an institution when there have been automatic deposits made into a deceased customer’s IRA.
The customer passed away in late 2014, but the automatic contributions were left turned on until 2015. Therefore some 2014 and 2015 contributions were made into the IRA after the customer passed away. The funds were distributed in full by the beneficiary in 2015.
I know that a deceased person cannot make IRA contributions:
https://irahelp.com/slottreport/you-cant-make-ira-contributions-deceased-person
How does the institution or provider report these contributions on Form 5498? Any guidance is appreciated.
Permalink Submitted by Jose Morales on Thu, 2015-04-09 23:56
They would be reported as contributions, however since the IRA owner was deceased they are excess contributions. The 1099-R should reflect a distribution of excess contributions for the portion of the total withdrawal that represents the excess contributions plus any earnings attributable to the excess. The remainder should be reported as a distribution with code ‘4’ representing a distribution to a beneficiary.
Permalink Submitted by abura98 on Fri, 2015-04-10 15:18
Hi there,Thanks for your answer. Very helpful. I have a follow-up: As I mentioned, the customer passed away in late 2014, but his IRA received automatic 2015 contributions. Does this means we report the 2015 contributions as excess on his 5498 for the 2014 tax year? Or do we need to generate a 5498 for the 2015 tax year as well?Thanks again.
Permalink Submitted by Jose Morales on Fri, 2015-04-10 15:30
What year were the contributions coded for? If they were prior year contributions then they will be on the 5498 for tax year 2014. If they were current year contributions they would be on the 5498 for 2015, which will not be generated until next year.