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I have a situation I have never encountered before. A client inherited an IRA that was split into 2 beneficiary IRAs by the custodian. It was then transferred directly to Edward Jones into another beneficiary IRA. The client received a 1099-R with "4" in box 7 and not "4G" which resulted in box 2A being for a taxable amount of the entire value instead of 0. Both the transferring and receiving custodians are of little help to the client but I have enough paperwork from both to clearly show a direct rollover. Should I have this client wait for a resolution and corrected 1099-R (if he gets one) or should I do a1040 showing the income and then a 1040-X with the correction and an explanation with all of the documentation attached?
Thanks in Advance!
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Paying tax that is not owed and then hoping to get it back: Nonsense. Waiting for paperwork that might never arrive or be sent to IRS, the only place it matters: Insanity.
Why not file an accurate return, showing it was rolled over with a trustee-to-trustee transfer if that's what happened?
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You describe Two Transfers. Who issued the 1099-R? Is that the first or the second transfer?
I googled "4G" for you.
"A spousal beneficiary would only receive code 4G if they directly rolled assets over from a qualified employer plan to a traditional IRA. If the spousal beneficiary rolled the assets from an IRA to their own IRA, they would receive code 4 on their Form 1099-R."
Don't yell at us; we're volunteers
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Thanks, we got it figured out. Navy Federal sent the 1099-R with a taxable amount of the entire amount. I went back and went with the 4 and a taxable amount of $0 and showed it as a rollover. Since I have never had this scenario before with the rollover shown as taxable on the 1099-R I was a bit concerned that even after filing a correct and accurate return that the IRS would come looking for taxes for what was shown as taxable on the 1099-R from Navy Federal. With the advice I have received I feel comfortable with how we will be submitting it.
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i could have written this post. I have the exact same situation.
Thanks for the advice!
