Inherited IRA that went to a spouse who now wants to consolidate it into her existing IRA

Submitted by Brian Smith on Fri, 2021-02-26 17:06

Hi,

A spouse took the proceeds from her spouse’s IRA and moved into an Inherited IRA b/c at the time she was under 59 1/2. Now she is over 59 1/2 and wants to consolidate into her own Traditional IRA. How does this need to be coded with current custodian for the 1099? Is it considered a Rollover? Thank you for your help and insights in advance.

Regards.

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Permalink Submitted by Alan - IRA critic on Fri, 2021-02-26 17:30

If the sole beneficiary and she elects to assume ownership, this is a non reportable transfer, no 1099R. If she instead took a distribution and did a 60 day rollover, there would be a 1099R coded 4 and this would count as a rollover for purposes of the one rollover limitation. While rare, someone posted the other day that the custodian DID issue a 1099R in error for an assumption of ownership, so it may be a good idea to confirm that the custodian in this case agrees beforehand that assumption of ownership will not generate a 1099R since it is being done as a transfer. Not sure how the first transaction was handled or how long ago this was, but if within the past 12 months and it generated a 1099R, it could make the pending transaction handling critical.