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Janitor Bob

How to report rollover contribution within 60 days

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client withdrew $105,000 from one IRA then (10 days later) made a rollove contribution of te same amount to a different IRA.  The 5498 shows the rollover contribution, but since 1099-R has code of "7", the software includes it as taxable.  How do I enter the rollover in ATX?

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14 hours ago, Janitor Bob said:

client withdrew $105,000 from one IRA then (10 days later) made a rollove contribution of te same amount to a different IRA.  The 5498 shows the rollover contribution, but since 1099-R has code of "7", the software includes it as taxable.  How do I enter the rollover in ATX?

Greg, since the client took control of the funds, the issuer has no choice but to use Code 7.  I believe you'll need to enter an explanation within the 1099-R entry.  There's a tab down at the bottom named "Rollover Explanation."  I had to use it twice on 2019 returns.  I entered detailed information regarding dates and names of both investment companies involved.  I also keep copies of the proof that my client deposited the funds within the 60 days, because I figure odds are good that they'll get a letter despite the explanation.

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I had a client once whose daughter did a manual rollover and prepared her own return for that year.  Guess who she got a letter from?  Fortunately she was able to come up with all the paper work and the rollover could be show to have happened within the allotted time.

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On 5/20/2020 at 9:58 AM, Janitor Bob said:

OMG...if it was a snake it would have bit me...looked at that screen for hours and did not notice that!

🙄

They hide until you cry "Uncle!" and ask for help.  Ask me how I know this...

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On 5/20/2020 at 11:00 AM, RitaB said:

I also keep copies of the proof that my client deposited the funds within the 60 days,

The ONE client we've had that did this, called to warn us ahead of time.  We had her send the paperwork at the time, put it in her file - along with an explanatory letter while the details were fresh in all our minds, and had it there waiting WHEN the letter came.  Ba-dum-cha off went the letter and documentation copies, problem solved in five minutes.  Because we pre-planned for it.

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