Question

Beneficiary IRA

Forum|Forum|4 years ago
April 9, 2022
2 replies
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I inherited a regular IRA in 2021 and it was transferred directly from the payer to a Beneficiary IRA account in 2021. In looking at the 1099R, the taxable amt is listed in box 1 Gross Distribution, but nothing is in box 2a Taxable amount. Within 2b, the Taxable Amount Not Determined box is NOT checked but the Total Distribution box IS checked. In Box 7, the distribution code is 4G and IRA / SEP / Simple box IS checked. Given this was a distribution directly from the Payer to a Beneficiary IRA account, is this this distribution taxable this year as ordinary income? Or taxable only when it is removed from the account in the future? Based on the age and death date of the individual, the account must be used within 10 years.

ColeenD3

If you received a total distribution in 2021, it is all reported on your 2021 return. It is more than likely taxable.

fanfare

Employee

you took a distribution, otherwise you would not have received a 1099-R.

enter the 1099-R.

a distribution from an inherited IRA is taxable income to you.

Critter-3

That is simply reporting the rollover to your beneficiary IRA ... hence codes 4 & G in box 7 ... 4 for inherited and G for the direct roll. This is not a taxable event but it must be reported. I highly suggest you enter the code G first in the program and complete all the follow up questions in that section so the program will treat it correctly on the form 1040.

D

dmertz

Employee

The original IRA custodian has messed up the reporting. This was a nonreportable transfer.

This appears to be one of the IRA custodians that hasn't yet figured out the IRS ruling that was made in 1978 (more than 40 years ago) that this is nonreportable and mistakenly has reported it with code G (along with code 4 because the participant has died). Code G is only for rollovers to or from an employer plan. It's never to be used for movement of funds between IRAs.

The payer must issue a corrected code 4G Form 1099-R with a zero in box 1.

Be aware that the proposed regulations from the IRS dictate that if the decedent died after their required beginning date fro RMDs, both annual RMDs based on life expectancy and full distribution by the end of the 10th year following the year of death are required (which is different from what was published in the final version of 2021 IRS Pub 590-B). Annual distributions are not required only if the decedent died before the required beginning date for RMDs.