Inherited Roth IRA

Forum|Forum|3 years ago
April 14, 2023
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I inherited a Roth IRA from my sister. It was under $2K. The credit union did a total disbursement. The 5 year rule has been met. I received an incorrect 1099R. I contacted the credit union and they did make a correction, but not a complete correction. Box 2a is now empty AND the taxable amount not determined box is checked. They changed the Box 7 code to a T. I was on the phone with the credit union for over an hour discussing this and their answer is that their system will not allow a code Q for box 7 and that is what they always use for a Roth IRA death distribution. She said it was up to my tax expert to determine if it is taxable.- I provided her all of the IRS publications that show this is a non-taxable distribution. But all she said was her system doesn't have Q as an option. She did send me a letter that actually states that the Roth IRA was originally opened in 2012. How do I get turbo tax to recognize this a "not taxable"? The credit union will not make another correction.

DianeW777

It depends. Enter the gross amount and zero taxable amount, enter the code 'T' as indicated on the 1099-R. This should not show up on your tax return as taxable. Another option is not to enter the 1099-R at all because you have all the documentation to show it's not taxable should the IRS ask questions later.

When I enter the 1099-R with your same selections, it is not taxed on the federal return. Make sure to view your 1040 after your entry to confirm.

Check your state rules to see if it is taxable or tax free for your state. How do I contact my state?

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