1099R Wrong Code

[Terry D EA]

Please excuse the title as I couldn't come up with anything to describe this scenario. Client closed an IRA account with Scott Trade and Opened an IRA account with another insurance company in 2017. Scott Trade issued her a check for the total distribution with box 2 marked as the total amount taxable. Code 7 normal distribution no exceptions. My client did open the new IRA account well within the 60 day requirement. The distribution is 21K. What forms do I need to show the 21K was rolled into another similar account? What to do with the 1099R to let the IRS know these funds were rolled into a similar account. I think I remember reading other posts on this subject but can't remember for sure.

[Lynn EA USTCP in Louisiana]

I am home now so cannot pull up a 1099R in the program. Look at 1099R input in the program, line 2. Isn't there a box to check on  line 2 to enter the amount in box 2 that was rolled over ? 

[jklcpa]

Terry, in Drake fill in the 1099R screen with the data from the form as issued, and then use the "Rollover" section at the bottom of that same screen to indicate that the amount was either partially or fully rolled over.  It worked when I tried it with code "S" for "rolled into same type of plan". If fully rolled over, no entry is required in the box for the amount; only for a partial r/o.

With those entries, the 1040 will print with "ROLLOVER" at the very left side of line 15,  gross distrib in 15a, and zero or blank in 15b.

[ILLMAS]

What will would be the support when the IRS comes knocking with CP notice?

[Lynn EA USTCP in Louisiana]

Illmas the support will be the client's  copy of the check they received and their paperwork showing they rolled the money into an IRA within the 60 day window. Also, the respective 5498's. 

[Terry D EA]

Thanks everyone. My client does have the paperwork and her ins/broker will be faxing that paperwork to me on Monday. Thanks Judy and Lynn. I didn't see the information at the bottom of the 1099R screen. I guess it has just been a seriously long day. 8:00 PM here, still working and started at 9:00 AM this morning.

[Catherine]

Get the check copy and BOTH brokerage statements NOW, while the clients still knows where they are.  Scan or copy, and put them in the file.  I had one of these a couple of years ago, and sure enough we got a letter.  I already had the letter written - put in the then-current date, printed the letter, check copy and both statements showing within the 60-day window, and it was done.

[TAXMAN]

Yeah and turning the clocks up an hour didn't help either.