Change IRA code?

[MargaretMort]

New client. He has been ill for 2 years with infectious mono. Worked part of 2008-disability-finally cut out of job. He drew 35000 out of an IRA, distribution code 1. Later drew 10000 out of same IRA, distribution code 3. He questioned why both weren't coded the same and was told "you can take care of that when you do your taxes." He was born in May, 1950. Can I change the code on the 35000 1099-R? think I saw something about this before but have no idea where to find it. Thanks.

[jasdlm]

Margaret,

I think that you should enter the 1099 as received and file a 5329. There's a place on the 5329 to enter 'disability code'. This happened to a client of mine a few years ago, and that's how I handled it. I haven't had any further problems. (Enter on Part I, Line 2.)

[Tax Prep by Deb]

Same here!

Once it was established that the disability was total and permanent I was able to handle the coding problems with the 5329. I likewise have had no correspondence to indicate this was incorrect.

Deb!

[MargaretMort]

Thanks, I will try that. He did give me a copy of a letter from a doctor stating he is disabled. I don't know if it is permanent but it certainly was considered so in 2008. MM

[schirallicpa]

Timely topic - I just had the same situation. Both 1099's from the same payor. I asked him to call Fidelity about it, but after he left the office, it occurred to me to use the 5329. You can input the code for the exception. So I will do that on his return and call him and tell him not to worry about Fidelity. Lord knows they'd screw it up more. They usually do.

[MargaretMort]

Interesting. His 1099 was from Fidelity, also. Thanks, again. MM