Direct Transfer
Individual requested partial direct Transfer of 2 TIRA’s to another custodian and took the remaining value as distribution. Prior custodian issued one 1099r for total account balance for each IRA with “normal distribution code 7” in box 7. Is this correct?
It would appear to make this look like an indirect rollover which would then be causing her to violate the one indirect rollover per 12 limitation.
Permalink Submitted by Alan - IRA critic on Thu, 2023-02-02 17:40
It is not correct. The 1099R should only include amounts distributed to the person. And since there are two IRAs there is still a problem with the one rollover limitation. However, the directly transferred amount should not be shown on any 1099R, therefore the custodian needs to issue corrected 1099R forms. That would reduce the one rollover limit issue to a smaller amount.