Rollover to Inherited Roth

[Kea]

OK, I'm still confused on this one. I thought it would make more sense when I got the 1099Rs.

When Dad passed, I was eligible for a death benefit from his pension. This was not Dad's money / not an IRA or anything. His pension stopped with his death. One of my options was to roll it over to an Inherited Roth IRA. I couldn't find much info on this scenario, but it sounded like a good way to minimize future taxes. I filled out distribution paperwork indicating the rollover was to an Inherited Roth. Custodian I rolled it over to said I need to take RMD. No problem.

Teacher Retirement sent a 1099R with the whole amount in box 1. Box 2 = 0. Box 7 = 4G.

Since it's rolled to a Roth, shouldn't it all be taxable? If so, does it qualify to be split between 2011 / 2012?

New custodian issues 1099R with RMD in box 1. Box 2 is blank; taxable amount not determined is checked. Box 7 = T (Roth distribution, exception applies).

I would think the original amount would be taxable, but RMDs from Roth would not be taxable -- as long as the distributions don't exceed the original contribution during the 1st 5 years. Once I'm past the 5 years, distributions would not be taxable regardless of amount.

This wasn't yet a Roth when I inherited it, so I'm not sure how (if) that impacts anything.

Thanks

[Pacun]

It seems that all the forms you are receiving are wrong. I would call them and see if can change them. I don't think you will have a choice of paying part in 2011 and 2012 since the roll over didn't come for a 401K or IRA.

I will suggest you to imagine that you qualify for the rollover and that you have two choices: (You select choice 1).

Choice 1. Pay all takes in 2010

Choice 2. Split between 2011 and 2012

[Kea]

Shouldn't the rollover be a code "2" taxable but no penalty?

Still not sure about being able to split. Your 2 statements seem contradictory --or, am I missing something?

Do I have the RMD taxability right?

[Pacun]

Shouldn't the rollover be a code "2" taxable but no penalty?

Still not sure about being able to split. Your 2 statements seem contradictory --or, am I missing something?

Do I have the RMD taxability right?

Maybe you are missing the word "imagine". You do not qualify for the 2 year split (I believe).

Since you are on your father's shoes, if you take money out, you will follow the same rules as if you were your father and you would will have the RMD tax liability.

You are right, 1099-T deal mainly with the kind of transfer transaction regarding the penalty but NOT the tax consequences.

[Kea]

Thanks. I had been confused because he never had that Roth, and even if he had there would have been no RMD.

So for the original 1099 that shows 4G in box 7, can I just input the taxable amount in box 2? Or, I need a new 1099 since IRS won't expect a taxable amount on a rollover?

Thanks!