1099R Box 7 code T Please Help!

[sandigi]

I don't know what to do with this. The explanation for code T says "Roth IRA distribution, exception applies."
Taxpayer is 66 and not disabled and not dead. I have researched until I'm exasperated and can't find out what to do with that darned "T".

Drake software is showing it all taxable
Box 1 $56,559
Box 2 blank
Box 2b check in Taxable amount not determined

[Roland Slugg]

Did you enter a $0 in box 2a? If I do that, my software treats the amount as non-taxable.

I believe the only difference between codes Q and T is that the trustee uses code T when it believes the distribution is exempt from tax but isn't sure because the Roth IRA wasn't held by that trustee for the required five years.

[sandigi]

more questions

Thank you for your reply, Roland.

Can I enter -0- even if not filled in on the form?

Since it is a ROTH distribution the IRA/Sep/Simple box isn't checked and it is showing on the Pension line 16a of F1040. I'm reading TTB pg 3-3 that says it should be on line 15 IRA distributions. What on earth am I doing wrong?

[FEDUKE404]

Input of code T for Form 1099-R

When I enter code T in the alphanumeric box for Form 1099-R, the software just dumps the full amount of the distribution on line 15a of Form 1040 and a zero on line 15b of Form 1040.

This almost seems logical.

Did you go through the Q&A for your tax software? Sometimes that makes a difference. . .

Also, was there a numerical code (in addition to Code T) in box 7 of the Form 1099-R ?

As best I can tell, per reviewing the instructions for Form 1099-R, use of Code T is appropriate when the holder of the Roth IRA account does not have a full "history" of the ownership or other relevant facts. The following is from said instructions:

Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but:
The participant has reached age 59 1/2,
The participant died, or
The participant is disabled.
Note: If any other code, such as 8 or P, applies, use Code J.

Sometimes you just gotta do the research. . .

FE

[sandigi]

I've researched!

When I enter code T in the alphanumeric box for Form 1099-R, the software just dumps the full amount of the distribution on line 15a of Form 1040 and a zero on line 15b of Form 1040.

This almost seems logical.

Did you go through the Q&A for your tax software? Sometimes that makes a difference. . .

Also, was there a numerical code (in addition to Code T) in box 7 of the Form 1099-R ?

As best I can tell, per reviewing the instructions for Form 1099-R, use of Code T is appropriate when the holder of the Roth IRA account does not have a full "history" of the ownership or other relevant facts. The following is from said instructions:

Use Code T for a distribution from a Roth IRA if you do not know if the 5-year holding period has been met but:
The participant has reached age 59 1/2,
The participant died, or
The participant is disabled.
Note: If any other code, such as 8 or P, applies, use Code J.

Sometimes you just gotta do the research. . .

FE

I've been researching for so long I'm embarrassed to tell you the hours! Just can't seem to find an answer. Drake software throws it on Line 16 pensions. I've checked the IRA box on the input screen and that puts it in the right spot on Line 15. I'll look in the software manual and see. Thank you for your response.

[ruthc]

Entering More Info on 1099

I don't use the same software, but hope this helps you. If code T is entered on the 1099 form, you should go below the form and more info is needed to finish. The software asks a question to check whether the Roth was held for the 5 years holding period or not. This check off will determine whether it is taxable and whether a penalty is incurred. Hope this helps.

[Burke]

My software has a box on the 1099-R input screen (which looks exactly like the IRS 1099-R) in which you put the first year the ROTH began. This tells the software if it qualifies for the holding period. Is the box checked on your 1099R showing "Total Distribution?" It is doubtful that it is all taxable. First, don't spend any more time on this yourself. Have the client tell you when the ROTH was first taken out. He should have the original papers. If he doesn't know, have him call the custodian for the info. If he doesn't meet the 5-yr rule, then the earnings are taxable, not his contributions. Then you can figure out your software, or override the fields if necessary.

[sandigi]

can't find a 5-yr check off button

I don't use the same software, but hope this helps you. If code T is entered on the 1099 form, you should go below the form and more info is needed to finish. The software asks a question to check whether the Roth was held for the 5 years holding period or not. This check off will determine whether it is taxable and whether a penalty is incurred. Hope this helps.

Thank you for the help, Ruth. I can't find a 5 yr button. What software do you use?

[sandigi]

so much to do so little time

My software has a box on the 1099-R input screen (which looks exactly like the IRS 1099-R) in which you put the first year the ROTH began. This tells the software if it qualifies for the holding period. Is the box checked on your 1099R showing "Total Distribution?" It is doubtful that it is all taxable. First, don't spend any more time on this yourself. Have the client tell you when the ROTH was first taken out. He should have the original papers. If he doesn't know, have him call the custodian for the info. If he doesn't meet the 5-yr rule, then the earnings are taxable, not his contributions. Then you can figure out your software, or override the fields if necessary.

Thank you, Burke. I am heeding your advice and not spending any more time on this. Have looked in Drake software and can't find a spot to put first year of Roth. Client told me it was qualified contributions and began in 2001 or 2002 and that he "lost money" in that IRA. He can't find original documents to tell me years and $ contributed.

"Total distribution" was not marked . . . although client said he closed out the account. So maybe that box is an error? I have gone on what client said. Followed your advice and overrode software. Showing all distribution as not taxable.

This is a great board and I am so thankful for the help. I don't know why I haven't used it more in the past.

[Burke]

Given the info you have, he may have had a deductible loss. But again, it is up to him to provide all that information. If he can't (sounds more likely he isn't interested in taking the time or trouble since I can guarantee you it can be obtained from the custodian -- assuming it has always been with the same one), then ce la vie! It's his problem, not yours.
PS: Pop a PM to JohnH on the Drake problem. He uses that software.

[EdCEA]

You need to ask client

You need to ask client if this is only Roth IRA. You also need to know the basis in Roths, and of course if a Roth established for 5 yrs.
Contributions come out first (basis) and earnings come out last. If these questions can't be answered, then you don't know if there is any taxable amount.

[Lion]

If your software has a form-like entry, look at Box 11 1st year of desig Roth contrib.

[sandigi]

ok

If your software has a form-like entry, look at Box 11 1st year of desig Roth contrib.

Thanks. Will do

[sandigi]

thanks.

Thanks. Will do

Thank you. Don't know why I didn't see that. Guess I was just filling in the 1099R screen from the 1099R form and being in too much of a hurry.

[JohnH]

I posted a partial answer on the other thread, then took another look at how Drake handles this and also read this thread.

You are probably trying to enter the info on the 1099 screen which appears under the "General" tab (the screen which more or less mimics the layout of the 1099R). However, there is a more detailed input screen you can use. Look under the "Adjustments" tab on the main screen. Listed under the "Adjustments" tab is a special input screen for Roth IRA's. It offers you more places to input data specific to your client's situation - these are not found on the shortcut screen.

There is also a nice short video you can link to. The link appears in blue near the top of the input screen.