IRA Rollover

[KBTS]

I have a client who is 72 years old. He had two IRA's - one with Oppenheimer and the other with Ameriprise. He rolled both over to IRA's with his bank. The year-end IRA statement from the bank shows both IRA's opened as rollovers; however, both 1099-R's show a distribution code of 7. (Of course he waited until after I had the return finished to show me the bank statement and tell me about the rollovers!)

Two questions:

1. I know you cannot make contributions to an IRA after 70 1/2, but I assume a rollover is OK?

2. Do I need to have client attempt to get corrected 1099's showing code G, or just show them as rollovers on the return and hope client does not get a CP letter sometime next year?

[gkaiseril]

More than likely the custodian will not issue a corrected 1099-R because they do not know better or they lost the account. I would get copies of the documentation for the distribution and the creation of the new IRA account. Attach a note with the time line of the disbursement and creation of the new IRA account. If a letter later comes, you have the documentation to show the rollover amounts and that the action was taken within the required time.

[taxmom34]

yes, you can roll over into IRA after 70 years old. i think your client took the money and put it in the bank IRA himself. so, the 1099r's are correct with code 7. all you need to do is write in rollover on line 15 of the 1040.

my bank transfered money from my IRA by mistake to my checking account,. i complained that i did not authorize it and they put the money back into the IRA account. guess what, january i got a 1099R with code 7

[KBTS]

yes, you can roll over into IRA after 70 years old. i think your client took the money and put it in the bank IRA himself. so, the 1099r's are correct with code 7. all you need to do is write in rollover on line 15 of the 1040.

my bank transfered money from my IRA by mistake to my checking account,. i complained that i did not authorize it and they put the money back into the IRA account. guess what, january i got a 1099R with code 7

According to client, he never received the check - it went straight to the bank. The bank statement shows the initial deposit as a rollover, so it would seem client is correct. Guess I am off to correct the return - still wish client had told me this up front instead of now.

[gkaiseril]

IRA custodians' customer facing employees know about as much about income taxes as payroll clerks who recommend checking Married and claiming all the total exemptions one is entitled to when both spouses are working. They also classify prohibited trans subject to a penalty actions as an illegal transaction.

[dyne]

A required minimum distribution may NOT be rolled over into a traditional IRA. Distributions which are NOT required minimum distributions may be rolled over. He can put the required minimum distribution into a savings account or CD or anything else including a ROTH IRA but NOT into a regular IRA.

[taxmom34]

there was no required minimum distribution for 2009, remember?

[DonPriebe]

Are you sure of that?

... He can put the required minimum distribution into a savings account or CD or anything else including a ROTH IRA but NOT into a regular IRA.

TTB page 13-14 says

Required minimum distribution. An amount distributed from a traditional IRA to meet RMD rules does not qualify for conversion into a Roth IRA.