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June 6, 2019
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I receive a mandatory inherited IRA distribution from my deceased mother very year. I rolled it over into my Roth IRA. Is there a tax advantage to the rollover and if so how do I enter it in turbo tax

  • June 6, 2019
  • 1 reply
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Best answer by ChristinaS

No, there's no tax advantage. You cannot roll distributions from an inherited IRA into a non-beneficiary IRA, so the transactions must be separate. This is not a rollover. Only spouse beneficiaries can do a rollover of this sort.

#1 RMD from Inherited IRA= income

#2 Roth contribution

The RMD on Form 1099R is taxable and Roth contributions aren't deductible. Do not indicate that you rolled this distribution into another account, as that is not permitted. Your 1099-R should reflect that the money was distributed (Code 4 in Box 7) Ensure that you list the money that you put into the Roth in a separate section of Turbo Tax, under Deductions and Credits- Retirement- IRA Contributions.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary

Inherited from someone other than spouse. If the inherited traditional IRA is from anyone other than a deceased spouse, the beneficiary cannot treat it as his or her own. This means that the beneficiary cannot make any contributions to the IRA or roll over any amounts into or out of the inherited IRA. However, the beneficiary can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of the beneficiary.

1 reply

Employee
June 6, 2019

No, there's no tax advantage. You cannot roll distributions from an inherited IRA into a non-beneficiary IRA, so the transactions must be separate. This is not a rollover. Only spouse beneficiaries can do a rollover of this sort.

#1 RMD from Inherited IRA= income

#2 Roth contribution

The RMD on Form 1099R is taxable and Roth contributions aren't deductible. Do not indicate that you rolled this distribution into another account, as that is not permitted. Your 1099-R should reflect that the money was distributed (Code 4 in Box 7) Ensure that you list the money that you put into the Roth in a separate section of Turbo Tax, under Deductions and Credits- Retirement- IRA Contributions.

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary

Inherited from someone other than spouse. If the inherited traditional IRA is from anyone other than a deceased spouse, the beneficiary cannot treat it as his or her own. This means that the beneficiary cannot make any contributions to the IRA or roll over any amounts into or out of the inherited IRA. However, the beneficiary can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of the beneficiary.

Employee
June 6, 2019
Hopefully, you are permitted to make Roth contributions. When you enter the amt put into the Roth under Contributions, you will receive a message if any amount is excessive.