1099-R from bank IRA

Forum|Forum|3 years ago
March 7, 2023
1 reply
0 views

Hello,

I am doing a Trust 1041 and read about the Trust earning income and that is where I get confused.

My in-laws are deceased and the 2 IRAs they had at the bank had their Trust as the beneficiary. We transferred both IRAs to the Trust fund withholding taxes on both. Is this considered income to the Trust or am I only reporting the taxes on the Trust?

Thank you.

TurboTax Business Windows

mglauner

Depending on the Codes in Box 7 of the 1099-R, you may be reporting a Rollover with Taxes Withheld of your transferred IRA's. Is the 1099-R in your name or the trust's name?

Either way it is taxable income, either to you on your tax return, or to the trust, which the trust would then pass on to the beneficiaries of the trust on a K-1 form that goes on the beneficiaries tax return.

If the income belongs to the trust, it can be entered as Other Income and any tax paid as Other Tax Payments.

Here's more info on 1099-R Distributions in a Trust that may help you.

collinsb032Author

The Recipient's name is the name of the family trust on both 1099-R forms. Box 7 (Distribution code) is 4 (death) on both as they had both passed when we transferred the IRA amounts to the Trust.

I still don't understand HOW it is earned income to the Trust. The beneficiary of both IRAs was the family trust. I can understand earned income being rental payments, interest earned, or assets sold. I know they would claim RMD each year for the IRAs, but I was under the impression a Trust limits taxation on assets.

Thanks again.