1099-R Code 7 really a rollover

[HV Ken]

Client took a distribution and received a 1099-R code 7. Money from distribution was then put into another retirement account within the 60-day window - in other words, it was a rollover.

We told client the 1099-R should have been issued with code G and to call the issuer to get the 1099-R corrected. Issuer told client they don't do this and all the client has to do is attach the confirmation statement from the new custodian that shows the transaction occurred within the appropriate time frame.

So how do I report this on the tax return? I have a 1099-R with code 7 and this is generating a taxable event. What do I do to show on the tax return this was really a rollover? The client called the fund company multiple times, and the fund company said they do this all the time (issue 1099-R code 7) and there is never a problem proving it was really a rollover.

Thanks for any help with this!

[PapaJoe]

ATX has a box under line 2a for rollover amount included in 2a. Put the rollover amount here and tax should go away.

[HV Ken]

ATX has a box under line 2a for rollover amount included in 2a. Put the rollover amount here and tax should go away.

Thanks! I never noticed that.

Still wondering - won't the IRS still be contacting the client to offer proof that this was indeed a rollover? Or do we attach the confirmation statement copy to an 8453, for example? I see now how we can tell ATX to make the amount go away, but it seems like there is still an open issue to close from the IRS point of view. Or am I missing something?

[RitaB]

Actually, it sounds like the issuer did not code the 1099-R incorrectly. Technically, your client did NOT roll it over; he was given a check. Therefore, the payer cannot code it G.

You might want to mail this return with explanation and proof of the timely deposit into another retirement account.

[jainen]

>>1099-R should have been issued with code G<<

The 1099-R was correct--Code G is only for a trustee-to-trustee transfer, not a 60-day rollover. I mean, how could the issuer know what happened to the money after they paid it out?. Mark the rollover according to your software instructions, and the 1040 should show a marginal entry on line 15 or 16. Certainly if the IRS has a question about it, or anything else, they must ask for documentation. That's the way the IRS itself has set things up.

[grandmabee]

IRA holder issues a 5498 form every year to the IRS and client where it shows rollover contributions. regular contributions balance of account. alot of the company don't mail until May. I think that must be the due date

[Kea]

I have kind of the opposite coding issue.

Money was rolled over from a "death benefit" to a Roth IRA. 1099R Shows 4G. It was a rollover, but since it was to a Roth it should be taxable. It rolled directly to Roth and distributor knew that from the forms filed with them.

Software will let me show the whole amount as taxable. Is that OK, or does the 1099 need to be corrected - changing the "G" to a "2"? Will IRS question why a Code G rollover is taxable?

Thanks.

(Personally, I would like to see a code 42 - but that's only significant to Douglas Adams fans.)

[HV Ken]

Mark the rollover according to your software instructions, and the 1040 should show a marginal entry on line 15 or 16. Certainly if the IRS has a question about it, or anything else, they must ask for documentation. That's the way the IRS itself has set things up.

Thanks to everyone for their help! I love this community!