Keeping the IRS happy
Hello Alan,
In 2020 I rolled back most, but not all, of my RMD’s and took a CRD later in the year. On my 2020 form 1040SR, line 4a will show $51K and line 4b, $3k. I’ll also complete a form 8915E to account for the CRD and form 5498 will report the rollback. Should I make a notation next to line 4b or include a brief statement to explain the difference between the two amounts? Thanks.
Permalink Submitted by Alan - IRA critic on Fri, 2021-02-05 17:14
Line 4a should show the gross totals of all the IRA distributions including CRDs. Form 8915 E (when finally released) will ferret out the taxable amount of the CRD including whether you elect the 1/3 reporting option or not, and whether you will have repaid any of the CRD by the due date. The taxable portion for 2020 from the 8915 E will go on 4b along with the 3k you kept of the normal distributions. Show “rollover” next to 4b. Do not worry about the 5498 other than to make sure if you repay and of the CRD to indicate the CRD repayment to the custodian since the custodian should report CRD repayments in Boxes 14a and b rather than as an ordinary rollover in Box 2.
The IRS has not even published the draft form for Pub 590 B yet which may provide some instructions regarding reporting CRDs on line 4b. Probably a good idea to provide an explanatory statement regarding 4b indicating how much of the reduced amount shown on 4b is due to the rollover you did and how much is due to the reduced amount of the CRD you are reporting on the 8915 E that flows to 4b.