Wrong taxable amount on 1099R

[Kea]

Money was rolled over from a "death benefit" to a Roth IRA. 1099R box 7 shows 4G and $0 in box 2. It was a rollover, but since it was directly to a Roth it should be taxable. But the distributor is now saying that the box to roll over to a traditional IRA was checked. They are also claiming that box 2 is $0 because no withholding on the "Roth IRA rollover" was requested. I tried to explain the difference between tax on the distribution vs tax withholding, but didn't make any progress.

Software will let me enter the 1099R as issued; then on 8606 enter amount as taxable rollover from qualified plan to Roth. (on the 1099R worksheet it does allow me to mark "rollover to Roth IRA). Is that OK? Or does the 1099 need to be corrected - fixing the taxable amount (and possibly code)? Will this avoid a "matching" issue if the 1099R matches (even if the 8606 will show a different taxable amount)? At this point, no one there seems interested in correcting the 1099R "after the fact."

Thanks so much!

[MrMojo]

"But the distributor is now saying that the box to roll over to a traditional IRA was checked"

What does box 7 show? THIS is what you need to look at!

Did you document your conversion with the agent?

How do you know it was a Roth rollover vs a traditional rollover? Did the client give you any documentation that stated either??

IF the financial institution stated it was a rollover to an IRA account, hence the taxable amount is Zero, then leave it at that.

IF you know that the amount was "actually" rolled over into a Roth IRA, then, yes, then the distribution amount "should" be taxable.

Too many IF's!

Yes, there "may" be a matching problem so you need to look at your client's docs to figure out how to correctly categorize the rollover.

Then include an explanation with the return explaining what happened. You may even include a statement explaining that the financial institution will not amend the 1099-R hence the matching issue.

FYI...

Almost all financial institutions will NOT issue a corrected 1099-R IF the client had closed the account and left the institution.

Even if the client had not closed the account, it's still very difficult in getting a corrected 1099-R since it could takes months (Literally! based on my experiences with major financial institutions with my clients!) before it's issued.

Good luck!

[Kea]

Box 7 says 4G.

Yes, it was rolled to a Roth. Also got a 1099R for the RMD from the "inherited Roth." Yes, I have the notes from the conversations with the pension agents.

If there's a matching problem, I have all documentation to show what happened.

Thanks!