IRA Early Withdrawl - 60 day rollover rule

[buelfarm]

Vangaurd sent a Form 1099R showing my client's IRA withdrawl with a Code 1 for early withdrawl - how do I find where to note that it was rolled into another IRA within 60 days on Form 5329?  HELP !! 

[Just-Lisa-Now-]

Scroll down down down the 1099R worksheet to Page 2, you'll find rollover options there.

[buelfarm]

Oh gee --> thanks !   I didn't know there was a section like that on the 1099 R worksheet ... strange thing is, if I check the B1 box, the cross reference refers to the typical Code G for a rollover, not the situation where there's already a Code 1, but then the distribution is returned within 60 days... I just don't know where to put it?! 

[Just-Lisa-Now- · Accepted solution]

Check B1 for an indirect rollover, if it was a Code G you wouldnt need to check any boxes yourself.

[buelfarm]

Really appreciate your time in my uncertainty!  Wish B1 spelled out the 60 day rollover rule - must be it's taken for granted & assumed b/c that's the only reason you'd need to check that particular box, as you said.  Just seems strange, but I'll go with it 🙂  Thanks, again!  I was stuck, for sure. 

[qbteachmt]

You should not expect to see Form 5329 if this is a qualified rollover.

The issuer of the 1099-R issues the code for what they know. They don't always code for a direct transfer, and they won't know about a rollover within the 60 days if your taxpayer did it themselves.

"1) Early distribution (taxpayer is under age 59-1/2) and there is no known exception to the early distribution penalty. Generally file Form 5329, however for a rollover to a traditional IRA of the entire taxable part of the distribution, do not file Form 5329;"

What you confirm is if it met the rollover requirements, including that when a taxpayer gets the money payable to them in between the source and destination, there typically is mandatory flat withholding. Make sure they rolled the gross distribution, not Net (they would have had to make up the withheld amount).

If you have everything that verifies it meets the requirement, then you enter the data accordingly.