Got a 1099R for partial Roth distribution marked with code 7 normal distribution. This was a Roth held for more than 5 yrs. When entered on the return with only code 7, this was shown as taxable on the return. The bank (CD Roth) said they didn't list it another way or with other info because they don't know if it was held more than 5 yrs or not. Can I enter more info on the 1099 in order for it not to be taxable? I entered a "B Designated Roth Acct Distribution" but it still came up with it being taxable. Thanks for any help.
-
-
Was this an IRA? If so, it should have been code T (assuming over 59 1/2), and the bank should fix it.Originally posted by ruthc View Post -
This was a Roth IRA. I called the bank and they said they didn't know how long I had the Roth (it was a direct transfer to the bank 2 yrs ago) so they couldn't enter the "T". Are you saying that the bank should not have entered "7" and just entered "T"?
At first, I entered code T and left the "7" and checked off at the bottom of the form that it was held more than the 5 yrs. It looked fine with it not taxed. When I was going thru the e-filing process the software (TaxAct) does a check for any inaccuracies and it noted the only codes allowed with "7" was A, B, D, and K. I entered "B" for "Designated Roth Acct Distribution" and it comes out taxable. I am stumped at this point.
If the bank has to change it I will call them again. I didn't know if a numeric and alpha code is allowed.Comment
-
The 5 year rule starts with the first Roth TP opens. Bank would not know that.
Assuming the distribution was return of contribution and not earnings: enter distribution in box 1 and 5, 0 in box 2 and check box for Roth IRA. This is assuming that 1099R does not have a value in 2.Last edited by kathyc2; 03-04-2015, 10:40 AM.Comment
-
Yes. Again, assuming over 59 1/2, it should just be T. Download the instructions for completing the 1099-R from the IRS web site.Originally posted by ruthc View PostComment
-
Questions
1 - Are you sure there is only a numeric (and not also an alphabet) code on the Form 1099-R ?
1a - Are you sure the Form 1099-R IS correct ? To include the IRA box being checked ?
2 - Is there a possibility you need to work through Part III of Form 8606 ? (Read carefully the instructions for line 19)
3 - Did you go through Q&A, or only use forms, with TaxACT ? That might help. . .
Oh yes: I would *STRONGLY* suggest against entering the Form 1099-R information in any way (including distribution codes) other than what is actually shown on the form itself ! ! !
FEComment
-
if you have documentation that it is not taxable include the document. You may have to trace back the funds to prove it isnt taxableBelieve nothing you have not personally researched and verified.Comment
-
Is the client over age 59 1/2?
But I agree, Roths are never code 7.Comment
-
TP is over 59 1/2
The TP is over 59 1/2 and has had the Roth since they started Roth's. The bank said they didn't know if it was held for the 5 yrs, that is why they didn't enter "T". If they didn't know they shouldn't have enter the "7" anyway because it is a Roth. But in this case with them not knowing because they had received the funds from Fidelity to put into a CD what should they have entered as a number or alpha in this case?Comment
-
1. There is only code 7 in box 7 for distribution code. There is no other letter or numbers. No check mark for IRA, etc.Originally posted by FEDUKE404 View Post
2. I went through form 8606. This TP was not an employee and started the Roth after she left work and was 60 yrs old. Has had it for over 5 yrs.
3. I only used the forms at TaxAct. I will now go through the questions to see how it comes out.
4. I agree about not changing the 1099R.
I think another call to the bank is needed.Comment
-
If bank didn't know
If bank didn't know if held for 5 years, code T should have been used. This almost sounds like the bank may have mistakenly put the IRA transfer into a traditional IRA.
EdCEAComment
-
Use Form 8606. show basis in the Roth section and current and prior eoy balances.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
Comment