Traditional IRA 60 Day Rollover Federal Return Documentation
In 2014, Mr. Joe Cicchinelli presented an article, “How To Correctly Report Tax-Free IRA-To-IRA Rollovers on Your Tax Return” online. He said:
1. The 1099-R from the custodian making the IRA distribution will have in box 2a that the entire IRA distribution is taxable.
2. To show that your IRA-to-IRA rollover is tax-free, report the IRA distribution amount and the taxable amount on the line 15a of Form 1040 as the amount of the IRA distribution and on line 15b to report “0” as the taxable amount, and then next to line 15b you would write “Rollover”.
3. The IRA custodian receiving the IRA rollover will submit IRS Form 5498 by the end of May which shows you rolled over the entire IRA distribution.
4. Go ahead and file taxes by the April 15 deadline without attaching Form 5498 to the tax return and to just keep a copy of the 5498 with ones records when it arrives .
Has anything changed with regard to these recommendations?
Permalink Submitted by David Mertz on Thu, 2022-02-24 17:53
Nothing has changed with regard to this except that beginning in 2015 the one-rollover-per-12 months limitation now applies to all of your IRAs (traditional and Roth) in aggregate. To avoid this limitation, IRAs should be moved by non-reportable trustee-to-trustee transfer whenever possible.
Permalink Submitted by Randall Martin on Sun, 2022-02-27 07:12
Thank you for your help. I see there is a 1040 form that has a line 4a and 4b. If I had a valid 60 day rollover of $50 from my traditional IRA custodian (IRA custodian A) that was distributed to my personal bank account for 40 days and then was deposited in a different traditional IRA custodian (IRA custodian B) and IRA custodian A filled out and sent to the IRS a 1099-R documenting the IRA distribution will have in box 2a that the entire IRA distribution is taxable, is the 1040 line 4a and 4b where I should report this? Should line 4a and 4b look like this. . . . . . .4a IRA distributions…4a. 50 b Taxble amount.. 4b. 0, Rollover Thank you!
Permalink Submitted by Alan - IRA critic on Sun, 2022-02-27 16:31
Yes, that is correct. Custodian B must have received the rollover contribution within 60 days from the date that you received the distribution from Custodian A. This will use up the one rollover permitted for 12 months from the distribution date from Custodian A. Until that period has elapsed any changes of accounts should be done solely by direct transfers, which are unlimited in number and are not reported on a 1099R.
FYI – the taxable amount in Box 2a is a provisional figure, and reporting the rollover on lines 4a and 4b will eliminate the Box 2a amount.