Discussion:IRA distribution - death
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| Revision as of 20:19, 5 April 2009 Deback (Talk | contribs) (You should enter) ← Previous diff |
Current revision Taxestaxes (Talk | contribs) (Thank you Deback) |
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| {{ForumReplyPost|UserID=Deback|Date=April 5, 2009|Text=You should enter the amounts exactly as shown on the 1099-R form, especially if you're efiling the return. Then be sure to check the box that the full amount was rolled over. You should be able to find this on the 1099-R worksheet. Enter code 4, not G. Your software will enter the text "rollover" and the amount in box 1 on the 1040 form to the left of the pension line and the taxable amount will be zero on the pension line at the right of the 1040 form.}} | {{ForumReplyPost|UserID=Deback|Date=April 5, 2009|Text=You should enter the amounts exactly as shown on the 1099-R form, especially if you're efiling the return. Then be sure to check the box that the full amount was rolled over. You should be able to find this on the 1099-R worksheet. Enter code 4, not G. Your software will enter the text "rollover" and the amount in box 1 on the 1040 form to the left of the pension line and the taxable amount will be zero on the pension line at the right of the 1040 form.}} | ||
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| + | {{ForumReplyPost|UserID=Taxestaxes|Date=5 April 2009|Text=Thank you Deback, I guess I am one of those who need clear directions! lol...That is how I entered it....I went thru the 1099r worksheet and it did just that. Thanks again!}} | ||
Current revision
Discussion Forum Index --> Basic Tax Questions --> IRA distribution - death
Discussion Forum Index --> Tax Questions --> IRA distribution - death
| 21 November 2007 | |
| I have a client who has recently received a death distribution of about $100,000. He is on disability with no other income, so it would be beneficial for him to spread this over a five year period (or longer) to take advantage of the zero and fifteen percent brackets he would be taxed at in future years. Is there any way we can "undo" the distribution and take it out periodically instead? We are still within the 60 day period to "rollover". | |
Death&Taxes (talk|edits) said: | 21 November 2007 |
| The funds had to be transferred in a direct rollover only, to a separate IRA set up for this purpose. From your question, it sounds as if he has the funds in his hands and will not be able to do anything unless the decedent was his spouse. | |
| 21 November 2007 | |
| Yes, he took the full distribution into a non-retirement account, and it was a friend who died, not his spouse. Maybe he should have called me BEFORE he took the money, not after. Reminds me of the client who called me the day after he sold some land, and told me he had heard he could set up a like kind exchange to defer taxes. And then threatened to sue me because I did not have a crystal ball when he was in earlier that year and tell him of Sec 1031.
He was the only client I ever had who was not a referral (he was a neighbor in the office complex); never again. | |
| 21 November 2007 | |
| That provision in the 2006 pension act (direct rollover) may not take affect until 2008 says the IRS. I think you should move fast and contact the IRS for a ruling. | |
Death&Taxes (talk|edits) said: | 21 November 2007 |
| I'm reading IRS Notice 2007-7 and only find in the preamble, "the transfer is treated as a direct rollover of an eligible rollover distribution for purposes of § 402(c). The IRA of the nonspouse beneficiary is treated as an inherited IRA within the meaning of § 408(d)(3)(C). Section 402(c)(11) applies to distributions made after December 31, 2006." I thought I had read that the Service would like to make mandatory the requirement that the old plan permit such direct rollovers, but I do not recall the Service waiving the direct rollover provision. Could you point me to the source? | |
Taxestaxes (talk|edits) said: | 5 April 2009 |
| I have a client who's husband died in Nov. and the bank made her rollover his IRA into her name. No money was exchanged, it was a direct rollover,even stayed with same bank, just changed his name to hers.....they sent her a 1099-r, coded 4. This makes it sound like she withdrew the money, shouldnt it have been coded G or something...indicating a rollover? I contacted the bank and they said thats what it has to be,the IRS will know? | |
Wonder Woman USA (talk|edits) said: | 5 April 2009 |
| So show the amount received, but no amount taxable, and be sure to check the box on your software that indicates rollover. | |
Taxestaxes (talk|edits) said: | 5 April 2009 |
| I did, I actually entered G as coded, my client is just worried IRS wont like this! She works at a bank herself, and like everyone else, dreads thinking of IRS questioning anything.. I explained that if they did, we could show it was a rollover due to death, etc. etc. and even printed out info. from pub 509 showing everything was ok....What do you do when these banks print out wrong 1099's? I guess nothing, sorry, I was just looking for some reassurance....Thanks! | |
Death&Taxes (talk|edits) said: | 5 April 2009 |
| In fact, her employer, in their rush, might have done her a dis-favor depending on her age and her need for money, since if she is under 59.5 any withdrawal from her own IRA will take a 10% penalty unless it meets one of the few exceptions. | |
Taxestaxes (talk|edits) said: | 5 April 2009 |
| She is over 60.....so the 1099 is right but the income is not shown as actual income since she never took it out.... | |
Death&Taxes (talk|edits) said: | 5 April 2009 |
| The 1099R must be issued to show the change in titling and ownership of the account. She did take possession, and thus a distribution. | |
Taxestaxes (talk|edits) said: | 5 April 2009 |
| Ok, I am sorry, I have never had one of these, and maybe I am making more out of it than I should.....from my understanding though she doesnt have to show it as income because it was rolled over..correct. Thats what I took from the pub. Again, sorry for dragging this out....if I dont tend to deal with certain issues every year, they leave my mind...:) | |
| April 5, 2009 | |
| You should enter the amounts exactly as shown on the 1099-R form, especially if you're efiling the return. Then be sure to check the box that the full amount was rolled over. You should be able to find this on the 1099-R worksheet. Enter code 4, not G. Your software will enter the text "rollover" and the amount in box 1 on the 1040 form to the left of the pension line and the taxable amount will be zero on the pension line at the right of the 1040 form. | |
Taxestaxes (talk|edits) said: | 5 April 2009 |
| Thank you Deback, I guess I am one of those who need clear directions! lol...That is how I entered it....I went thru the 1099r worksheet and it did just that. Thanks again! | |
