Client used money about 100K from his IRA to purchase a house and put all the money back into his retirement account within 60 days. The 1099-R says taxable amount not determined, has an amount in box 1 and 2 (100K), and is coded box 1 early distribution, no known exception. How to adjust the return for this? I can remove the penalty by filling out an 5329 but the 100K taken out still shows as taxable.
Thanks. Got the software part figured out which now shows the amount as a rollover without having to change the input from the 1099-R. It seems that I just fill out the 1099-R in the software as my client received it (with an amount in the tax not determined field and Distribution code 1, no known exception). And use the software to adjust the 1099-R for the rollover. Is that right?
Typically the amount rolled over is an input on the 1099R entry screen. Varies by software but for TaxACT it's a single number entered under the title "Additional Information not reported on Form 1099-R", third entry down. The 1099-R fields are entered without alteration.
The IRS instructions mandate that any rollover (even if the money is returned to the same custodian within the 60 days) be coded as a premature distribution.
Since we now have new rules regarding rollovers, the IRS cannot really police the one rollover per year rule.
Keep the rollover info for the reply to a letter coming from the IRS!
18-Aug-2019 12:37pm
