Discussion:Inherited IRA rolled - taxable?
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Discussion Forum Index --> Tax Questions --> Inherited IRA rolled - taxable?
| 20 March 2008 | |
| 23 year old client's mother passed away in 2006. Father died in 2003. Mom had inherited IRA from dad. Now have received 2007 1099-R in mom's name (not estate name - bank says they didn't have the estate number, but they showed it on another 1099R). $75K in box 2 indicates all taxable but taxable amount not determined box is checked. What really confuses me is the client and his brother rolled (?) the money into IRAs, so why is it taxable?
Should I do nominee statement to the estate? How? Is it a 1099 or just a written statement attached to the 1041? Do I have to put the income on the 1041 and show on K-1 as taxable to the brothers? Also, to show you how little experience I have with estates, is the estate number written like SS # or FEIN. The bank shows it as SS# 000-00-0000. Thanks for your help! I have cookies enabled on my computer so compensation will be prompt! | |
| 20 March 2008 | |
| Depends. Was the original IRA rolled into another titled"Estate of Jane Doe IRA, John Doe ,Bene" or something to that effect? If so there's no tax, but the proceeds w/b taken over the life of the bene.
If the bene took the money and put it into his own name, there may be tax. | |
| 20 March 2008 | |
| oops - that assumes that these were rolled by the mom, not the kids | |
| 20 March 2008 | |
| if she gave any money to the kids then it is taxable to her | |
| 20 March 2008 | |
| The banks systems often can't handle 31-4567890 so reprot it as 314-56-7890.
If the client and brother were the beneficiaries, the money would have to had gone to him. I don't think there is any election toput it on the decedent's return. Maybe you should just report that as "gross amt" and "-0-" taxable. Then if IRS sends a love letter,write to them and explain the situation. If you don't report the gross amont, the IRS computers will spit out a letter. | |
| 20 March 2008 | |
| non-spouse beneficiaries can't roll over inherited IRAs, they can only take distributions, as Barb is trying to explain above. | |
| 20 March 2008 | |
| Original IRA (from Dad) was apparently rolled into mom's name, prior to her death, but not into estate (there was no estate for dad). Then, in 2007 after her death in 2006, the IRA was distributed to IRAs in the kids' names. Mom did not give money to kids. The 2007 1099 was issued to "IRA FBO mom's name" "Investment Company as custodian beneficiary IRA". The new IRAs are also custondian beneficiary in the brother's names.
The banker says "it is shown as taxable on 1099 but that's just a paper trail to then indicate it as a rollover". The 1099 code is 4, so can I just show the 75K (32.5K each) as rollover on the tax returns? I thought for 2007 non spouse benes could roll to IRA. Isn't IRS going to be looking for 75K on mom's tax return? even though she couldn't file for 2007? | |
| 20 March 2008 | |
| Hmmmm, rollovers where cash is issued and then re-deposited aren't allowed for non-spouse beneficiaries. Trustee to trustee transfers setting up beneficiary IRAs are allowed. You need to find out whether checks were issued to the sons or whether it went trustee to trustee. | |
| 21 March 2008 | |
| No checks weren't issued to the sons. This was a direct rollover. The same bank handled the kid's accounts. | |
| 22 March 2008 | |
| MTX, since it was a trustee to trustee transfer, no income would be reportable on the transfer to the beneficiary IRA. | |
| 30 March 2008 | |
| Sorry to bring this up again but I have new info. What if the two brothers were not named as beneficiaries on this particular IRA and the clerk of the court declared them next of kin? The bank did a trustee to trustee transfer. The investment statements show the accounts the money was transferred to, which are the new IRA accounts. The name on the IRA account is "IRA FBO son's name BDA as custodian IRA mom's name DEC". But, bank also issued the 1099 in the mom's name. Still not taxable? When the love letter comes from the IRS do I show them the court docs? | |
