1099-R Form

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  • #2412
    zkeith42
    Participant

    I have a couple of questions about a Qualified Charitable Distribution I made from one of my retirement accounts in 2018. Following is my description of what happened. I’m using round numbers to simplify the discussion.

    The 2018 RMD for this account was $12,000. I made a QCD of $2,000 from this account, which leaves a remaining RMD of $10,000.

    On December 15 when the RMD was taken from the account, it was for the full $12,000. I called the plan administrator and was told (1) that my account was set on “automatic,” (2) that I needed to call the plan administrator prior to the processing of RMD to let it know that the amount to be removed on December 15 was $10,000 because I had already taken the $2,000 QCD, and (3) I could deposit $2,000 back into my account on a 60-day rollover, which I did.

    When I received the 1099-R from the company, it shows a Gross Distribution of $14,000 and a Taxable Amount of $14,000. It should have shown a Gross Distribution of $12,000 and a Taxable Distribution of $10,000. I called the company to ask for a corrected 1099-R and was told that could be done and that I should work with my tax advisor to resolve the issue.

    I have the incorrect 1099-R, I assume I will be receiving a 5498 Form for the 60-day rollover, and I have paperwork from the plan administrator showing that it sent the charitable entity a check for $2,000 as well as a receipt from the charitable entity showing a $2,000 donation.

    So here are my questions: Will it be ethical for my accountant to take my explanation and my paperwork to prepare my 1040 Form showing that this account had a gross distribution of $12,000, a taxable amount of $10,000, and a QCD of $2,000 in spite of the fact my 1099-R shows $14,000 for both of these amounts? I do not expect my accountant to do anything that is not ethical, but I also don’t want to have to pay tax on the QCD amount, nor do I want to run afoul of IRS. Any input will be appreciated.

    #2413
    zkeith42
    Participant

    I left a very important word out of my explanation. I was told by the plan administrator that getting a corrected 1099-R was NOT possible and that I should work with my accountant to resolve the issue.

    #2414
    dienerte
    Participant

    We will wait for a more authoritative response, but I believe the issuance to the 1099-R is correct and that it is up to you to report the information correctly on your tax return.

    Had you just made a $12,000 RMD of which $2,000 was a QCD, the investment company is correct in issuing you a 1099-R for $12,000. You would have to account for $2,000 of the distribution being a QCD by reducing the taxable amount of the distribution to $10,000 and showing a notation on the return for line 4b and being a QCD.

    I believe with the issuance of a $14,000 1099-R you would basically do the same thing and reduce the taxable amount on line 4b to $10,000 and have two notations; one for a QCD and one for a roll-over. The investment company is correct in the issuance of their 1099-R.

    I am not sure what would be done, if anything, if you have already had a roll-over in the past year. Maybe Alan S. or someone else with comment on this matter and my post in general.

    • This reply was modified 2 years, 6 months ago by dienerte.
    #2416
    kaneohe
    Participant

    Agree w/ Tom D. that the reporting by broker was correct and the taxpayer response should be just to reduce the taxable amount with suitable coding notes: QCD/Rollover.

    Sounds like the consequence of violating the 1 rollover/12 mo rule would be to make the entire transaction taxable and the part that was rolled over an excess contribution. https://www.irs.gov/retirement-plans/ira-one-rollover-per-year-rule

    If you don’t get a response by Alan S. here, you might try posting in the retirement forum . Now I’m feeling better about handling the RMDs manually….because of the QCD issue. Long term tho it would be better if the broker took that into account as well as any other withdrawals so certainly an issue to feedback to them so they can improve their process.

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