Rollover

[Diane]

Client received a 1099R with a code "1".

Client provided paperwork indicating a rollover.

I was thinking a drafting a letter with the return with the appropriate documentation indicating a roll-over.

Appreciate any comments.

[stern100]

nope, fill out form 5329 part 1

[Brian EA]

Client received a 1099R with a code "1".

Client provided paperwork indicating a rollover.

I was thinking a drafting a letter with the return with the appropriate documentation indicating a roll-over.

Appreciate any comments.

No need to draft letter with the return.

My software has a box to check if the distribution was rolled over. Code 1 is still shown on the return but the taxable amt is 0.

[RLymanC]

Roll-Over

Anyone know how the IRS treats a 1099-R Box 7 code 1 that is changed by the tax preparer to a roll over???? Always thought a corrected 1099-R had to be filed.

[Brian EA]

Anyone know how the IRS treats a 1099-R Box 7 code 1 that is changed by the tax preparer to a roll over???? Always thought a corrected 1099-R had to be filed.

Not true. A client can withdraw his entire benefit , holds it for 59 days then roll it over.
The 1099R will show code 1 in box 7. He does not need a corrected 1099R because it was not rolled over with the same company. The new company will however issue a 5498 sometime in may. This will confirm his rollover

[Matt Sova]

Brian is correct

How would the distributing institution know whether or not they rolled it over? They report it as 1 and the taxpayer reports the rollover on the 5329.

[Bees Knees]

No need for form 5329 either. A rollover amount is shown on line 15a or 16a on the Front of the 1040 with line 15b or 16b zero with the word "rollover" to the left.

Thats it. 5329 is only used to avoid the 10% penalty when part of it is taxable. Since nothing in a rollover is taxable, there is no need for Form 5329.