Code N on 1099R

[Margaret CPA in OH]

I haven't seen this code before.  The description is "Recharacterized IRA contribution for 2021 and recharacterized in 2021."  And this means?  The client said she rolled over part of her retirement funds.  Her Roth contribution is $2915 and the 'N' amount is 2975 so  suspect that she overcontributed so financial advisor 'fixed' it.  Sound about right?  Code N does not make it taxable but I'm not sure if any other reporting is needed.

[Lee B]

Copied from the CCH Knowledge Base:

 

"Distribution Code N

If the distribution code entered is "N", the distribution carries to Form 1040, line 15 or 16 as a pension or IRA distribution, but see the following note.

Note: If this is a recharacterization of a Roth IRA contribution back to a traditional IRA, this entry should be made on the IRA Information > Recharacterization of contributions field. Please read the instructions to that field to determine the proper treatment for this distribution. 

But if this is a recharacterization of Roth IRA distribution, this amount should be netted against any Roth IRA conversion entered in the Roth IRA Information section > Total distributions converted to Roth IRAs field.

If this was a complete recharacterization from a Roth IRA to a traditional IRA, the Gross distribution field should be entered with a zero for the Taxable amount field. The Form 8606 is not required in this situation."

[Margaret CPA in OH]

Thanks so much, especially for not chiding me for not researching first.  I usually do so but had a too quick reaction today.  Clearly I have to get more information from the client about exactly what happened.  I did see it go to the 'right' place but have to find out more detail.  Thanks again!

[Lee B]

You're Welcome