1099 R incorrect distribution code

[Tracy Lee]

TP received a 1099 R for $227,701.42 (annuity) with a distribution code of 7D showing all of it as taxable.  He is insistent that it was a rollover into another account, so the code is incorrect.  I have asked him (twice, he's 92 and confused) for the first statement for the company it was rolled over into to show money out and money in.  Can I send that as an attachment and do a rollover explanation in ATX and put 0 in box 2a showing it as not taxable?   I can't seem to find any other way around this to show it as not taxable without waiting for a corrected 1099R.  What is my best option with this, especially working with such an elderly man who keeps bringing me the wrong information.

[schirallicpa]

I might hold out a little longer for the paperwork.  I have an elderly mother with the same situation - and guess what - it wasn't really rolled over.  It was just put in a bank.

 

[Lee B]

I would insist on copies of the actual monthly statement from the first fiduciary showing the the distribution and the date distributed

and the actual monthly statement from the second fiduciary showing the amount received and the date it was received.

While it's possible that the distribution code is wrong it's equally possible that your client is wrong.

 

[Tracy Lee]

So lets assume he is correct, will a corrected 1099 R be required to file or is there a way in ATX to show that rollover so it is not taxed?

[Lee B]

Well, what are the odds that the IRS will kick out a computer matching CP2000?

They certainly did several years ago with my client for a clumsily handled IRA rollover.

[kathyc2]

See if Pub 575 answers your question:  https://www.irs.gov/publications/p575#en_US_2021_publink1000226849

 

[Slippery Pencil]

[mcbreck]

Yes you should include a copy of the statement showing the money going into the account. If it's a 60 day non-direct rollover, the 1099 isn't going to show a correct code. I upload a copy of the statement because the IRS will request it later (and may not even notice it was uploaded).

[Sara EA]

I don't think it's necessary to attach anything, and I don't think the IRS will even notice the attachment.  The taxpayer will get a 5498 and so will the IRS.  It will show the rollover.

[Jim Oh Bkkr]

Maybe the original account was from a NONqualified plan.

[kathyc2]

2 hours ago, Jim Oh Bkkr said:

Maybe the original account was from a NONqualified plan.

That is what the code D in OP would indicate.  Non qualified annuities have their own rollover rules.  

[WITAXLADY]

i HAVE A CLIENT WHO WENT FROM A tRADITIONAL TO A rOTH =- SO IT IS A ROLLOVER  BUT STILL TAXABLE.. oops! sorry

Client 1 - either attach or have available...

D