Trustee to Trustee IRA transfer
In 2019, I transferred my ROTH + Traditional IRAs from one firm to another firm. At no time did I have any disbursement – it was all done electronically. One asset fund could not be transferred in kind – so it was liquidated and the cash transferred to the new firm electronically. Again, I received no disbursement. Everything went into qualified plans. No brokerage account was set up either.
I filed early in the year – and I was not expecting any additional tax forms. My taxes are super simple. I did get a 1099R later and just put it in the file and didn’t really look at it – because I figured it was part of the whole transfer that had happened about 10 mos prior. I am fully aware that I should’ve paid attention and figured this out THEN instead of now.
Fast forward. I have received a tax bill from the IRS and I believe I’ve narrowed it to this one asset (all other assets were fully transferable) that had to be liquidated. I can track it thru in my statements and see where it landed as cash and how it was treated after that (stock purchase for the traditional IRA). Again, I received no disbursements. The 1099R listed it as taxable income code 1. However, I never received a disbursement – it went from one firm to another into qualified plans (traditional and Roth). I did not convert anything from traditional to Roth at this juncture either. I think the 1099R was in error and should’ve been coded G (qualified plan).
Everything is with my accountant right now. But I am looking for insight. What is going on here? It gets more complicated in that the originating firm has been bought out and no one seems to have any record of me (it was less than 2.5 years ago). The firm changed ownership about 6 months after I moved my accounts to another firm. This was not some shady firm – at all.
Bottom line – did that asset conversion (no check generated to me as the taxpayer; everything done within 60 days) to move that one asset to traditional IRA at the new firm cause a taxable event? I never received any income to claim and no brokerage account was set up to receive it – it went from my traditional IRA at one firm to a traditional IRA at another firm.
What do you think?
thanks.
Permalink Submitted by Alan - IRA critic on Mon, 2021-07-19 17:27
The 1099R was issued in error if these funds were moved directly to other IRA accounts. However, if you rolled anything into an employer plan such as a 401k, you should have received a G coded 1099R. For IRA to IRA transfers there should be no 1099R and also no 5498 form.
Did you receive a 5498 from the receiving account? If they received a direct transfer there should be no 5498 and no 1099R and the transfer is not reportable on your return.
This sometimes happens and it usually is simple to show the IRS that the 1099R was in error. While there should have been no 5498, if you received one (about one year ago) was the amount the same as on the 1099R? If you did NOT receive a 5498, you need to provide the IRS with a copy of your current TIRA custodian’s statement for the month they received the transfer. It is unlikely that they received the cash on the same day they received the other transferred funds.
While you could report a 60 day rollover, you may not have had a rollover available. If you did a rollover in the year prior to this transfer, you would not be able to do another 60 day rollover, and if you report a rollover you also could not do another for the 12 months afterward, but that period is probably about over. If you DID receive a 5498 showing a rollover contribution to the new custodian and you are sure you had a rollover available, it might be easier to eliminate the tax bill by showing the IRS the 5498 and statement of incoming funds. But it is safer to state that the 1099R should never have been issued, but that might be harder to prove. If you got that 5498, the IRS also received theirs.