Question

Converted part of a Traditional IRA to Roth IRA while transferring both to a new institution; incorrect 1099R

Forum|Forum|5 years ago
February 18, 2021
1 reply
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I had a Traditional IRA in the amount of $142,416.36 in a Certificate of Deposit account that matured at Bank A. I wanted to move the entire amount to Bank B and in the process convert $30.000. to a Roth IRA and rolling over the balance to a Traditional IRA. Bank B completed two separate Request Forms one Transfer ($112,416.36) and one Conversion ($30,000) which I presented to Bank A. Bank A then completed two IRA Distribution forms; one marked Transfer to another IRA ($112,416.36) and the other marked Conversion ($30,000). Bank A issued two separate checks both made payable to "Bank B FBO MY NAME" which were hand delivered to Bank B the same day (11-20-2020). Bank B then opened and funded two IRAs, one Traditional and one Roth in the amounts above. Now here is the problem. I received a 1099-R from Bank A. Box 1 - Gross Distribution - $142,416.36; Box 2a - Taxable Amount - $0.00; Box 2b - Taxable Amount Not Determined - Blank, Total Distribution - Marked with an X; Box 7- Distribution Code(s) - N; IRA/SEP/Simple - Marked with an X. How do I enter this into Turbo Tax download to accurately reflect the Roth Conversion? Is it necessary to get a corrected 1099-R Bank A?

D

dmertz

Employee

Bank A should have processed the transfer of the $112,416.36 as a nonreportable trustee-to-trustee transfer, so the code 1 Form 1099-R should only show the $30,000 that was converted to Roth. Contact Bank A and request a corrected Form 1099-R.

What I don't understand is where the code-N Form 1099-R came from. You haven't mentioned doing any recharacterizations of IRA contributions made for 2020 in 2020 and you did not mention any dollar amount for the code N Form 1099-R.

B

bc3523Author

i don't understand the Code N either. The only dollar amount on the 1099-R is Box , everything else is zeros. This was just a conversion not a recharacterization. So you believe I need to get a corrected 1099-R? Can't just enter the correct amounts and pay the taxes due?

D

dmertz

Employee

Codes 1 and N have to be different Forms 1099-R since these two codes cannot be present on the same Form 1099-R, so it would probably make sense to ask the IRA custodian why that is there.

You can enter the report the $112,416.36 as having been rolled over, but that you subject you to the one-rollover-per-12-months limitation, although that might not be a problem. However, if Bank B treats this as a transfer and therefore does not report on a 2020 Form 5498 receipt of a rollover, the IRS will likely question whether or not a rollover was actually completed. I would make sense to determine what Bank B considers the deposit to be.

To report in TurboTax a combination of rolling over $112,416.36 and converting $30,000 you would have to split the code 1 Form 1099-R into two for entry, one showing $112,416.36 in boxes 1 and 2a and the other showing $30,000 in boxes 1 and 2a, everything else remaining the same. (I assume that nothing was withheld for taxes.)