1099 R Code 7 IRA to Roth

[JG EA]

TTB 13-15 says

Conversions are either partially or fully taxable
and are reported in Part II, Form 8606.

My client has a 1099R with just a code 7 for the IRA that was converted to the Roth. I would not have known this had not the client told me.

So, would you put it on the 8606 or just show it as a taxable distribution?

[Gretel]

I would report as conversion if the requirements are met. Within the first five years there are special rules about withdrawals, and they are different if it was a contribution or a conversion. End of my knowledge without homework.

[JG EA]

Thanks - I had planned to warn about the 5 years.

But, what am I missing - why do they report it on a 1099R Code 7. I mean that is what it is - a distribution and if he is old enough so no 10% anyway, but this was trustee to trustee. Why wouldn't it show as a conversion? Maybe it doesn't matter. But if someone got it out and was under 59 1/2 and waited the 60 days to put it into a Roth they would clearly have to show it on the return to avoid the penalty. Not a big deal but just wondering.

[BP.]

why do they report it on a 1099R Code 7. he is old enough so no 10% anyway

http://www.irs.gov/pub/irs-pdf/i1099r_11.pdf

It looks like 1099-R instructions say to use "7" for conversion into a Roth if at least 59 1/2. Code "2" if younger.

[taxea]

was it transferred directly from account to account and not a check to the holder then a Roth opened? You are allowed to correct codes on a 1099 just be sure you can prove it, if asked.