IRA Trustee to Trustee Reporting

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills

IRA Trustee to Trustee Reporting

Postby Leesbro63 » Sat Mar 16, 2013 9:06 am

In prior years, I received a Form 1099-R when transferring an IRA (Traditional) to another IRA custodian. And I reported the amount on Form 1040, Line 15A, with nothing reported on line 15B. (Showing the distribution and zero taxable).

In 2012, my daughter did a custodian to custodian transfer of a Roth IRA to a ROTH IRA. She did not receive a Form 1099-R. I am reading on some of the other tax places that some (all) brokers now have eliminated doing that, apparently due to some IRS acknowledgement that this is no longer necessary.

Anyone have any definitive info about this?
User avatar
Leesbro63
 
Posts: 3514
Joined: Mon Nov 08, 2010 5:36 pm

Re: IRA Trustee to Trustee Reporting

Postby kitteh » Sat Mar 16, 2013 9:47 am

I can only say that I have done many IRA trustee to trustee transfers over the years. Originally I would receive a form (I suppose it was a 1099) and I would write a letter (sigh) to go along with the tax return saying, I got this form, but it wasn't really a taxable event. I didn't enter anything about it on the tax returns.

At some point I stopped doing that. For the purposes of my tax returns, I treat trustee to trustee transfers as invisible. The IRS has not landed on my head and I have been doing this for some time.

I'm not even sure I get 1099s for this type of transfer any more. I tend to just file 1099s away in my records because I have my own records of what has to be reported, and if memory serves me correctly, the 1099s come late and I file my taxes fairly early. I suppose I should check the 1099s for accuracy, but even though I am fairly compulsive, I don't do that.
kitteh
 
Posts: 194
Joined: Fri Mar 15, 2013 1:13 pm

Re: IRA Trustee to Trustee Reporting

Postby jared » Sat Mar 16, 2013 11:27 am

A transfer from one IRA trustee to another is not considered a distribution or a rollover. See Rev. Rul. 78-406.

The transfer should not be reported on Form 1099-R. See page 5 of Form 1099-R instructions (http://www.irs.gov/pub/irs-pdf/i1099r_12.pdf):
Transfers
Generally, do not report a transfer between trustees or issuers that involves no payment or distribution of funds to the participant, including a trustee-to-trustee transfer from one IRA to another IRA,
...
jared
 
Posts: 449
Joined: Mon Jul 07, 2008 12:57 am

Re: IRA Trustee to Trustee Reporting

Postby damjam » Sat Mar 16, 2013 11:53 am

I did two transfers last year involving two different firms that I was taking money from, and did receive two 1099-Rs with code G in box 7 (rollover).
Upon further reflection I believe these transactions were not true trustee-to-trustee transfers.
The firms from which the funds were departing issued checks made out to the receiving firm, but mailed the checks to me. I then had to forward the checks onto the receiving firm. Even thought I never touched the money I did touch the checks. I remember a debate some time ago as to whether this scenario would constitute a direct trustee-to-trustee transfer or a direct rollover or even an indirect rollover. I guess we have our answer now.
User avatar
damjam
 
Posts: 834
Joined: Thu Mar 25, 2010 8:46 am

Re: IRA Trustee to Trustee Reporting

Postby Alan S. » Sat Mar 16, 2013 1:22 pm

damjam wrote:I did two transfers last year involving two different firms that I was taking money from, and did receive two 1099-Rs with code G in box 7 (rollover).
Upon further reflection I believe these transactions were not true trustee-to-trustee transfers.
The firms from which the funds were departing issued checks made out to the receiving firm, but mailed the checks to me. I then had to forward the checks onto the receiving firm. Even thought I never touched the money I did touch the checks. I remember a debate some time ago as to whether this scenario would constitute a direct trustee-to-trustee transfer or a direct rollover or even an indirect rollover. I guess we have our answer now.


You are correct, these were direct rollovers. Note that a non reportable transfer (no 1099R and no 5498) is limited to IRA to IRA transfers (except non Roth IRA to Roth IRA). Your G coded 1099R does not reflect such a transfer, but rather a "direct rollover". A direct rollover is always reportable even when the funds are physically moved directly between trustees. You would always receive a 1099R for a direct rollover. I assume that these checks were not issued by an IRA custodian but rather by a non IRA plan, and therefore you reported them on lines 16a and 16b of Form 1040. The only situation where a G code is used by an IRA custodian is when the IRA funds are moved by direct rollover into a qualified employer plan.
Alan S.
 
Posts: 3394
Joined: Mon May 16, 2011 7:07 pm
Location: Prescott, AZ

Re: IRA Trustee to Trustee Reporting

Postby MarkNYC » Sat Mar 16, 2013 1:27 pm

There are 3 different ways to move funds from one retirement fund to another without tax or penalty:

1. ROLLOVER. When the taxpayer receives an IRA or qualified plan distribution check and re-deposits the distribution amount into another IRA or qualified plan within 60 days.

2. DIRECT ROLLOVER/TRANSFER. Assets are distributed from an IRA or qualified plan and directly moved into another IRA or plan. Generally a check is made payable to the receiving custodian/trustee and given to the taxpayer who delivers it to the new trustee. The taxpayer never gains control over the assets in transit. Generally, direct transfers of similar types of IRAs are not reported to the IRS.

3. TRUSTEE TO TRUSTEE TRANSFER. Similar to a direct transfer, but no distribution occurs. The first trustee moves the assets electronically to a similar type of account with the new trustee.

The first type requires a 1099-R. The third does not. Generally, the second type requires a 1099-R if the funds are coming out of a qualified plan, but not if coming out of an IRA unless part of a Roth Conversion. The three terms are often used interchangeably, but not always correctly.
MarkNYC
 
Posts: 766
Joined: Mon May 05, 2008 8:58 pm


Return to Personal Finance (Not Investing)

Who is online

Users browsing this forum: Cash, Crimsontide, curmudgeon, douginct, fareastwarriors, TDAlmighty and 46 guests