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I HAVE INHERITED AN ANNUNITY FROM THE DEATH OF MY FATHER, HE TOOK HIS 2007 DISTRIBUTION AND THAT WAS CLAIMED IN HIS TAX RETURN, MY QUESTION IS, THE INSURANCE COMPANY SENT ME A 1099 FORM STATING THE AMOUNT OF MONEY THAT WAS TRANSFER TO AN IRA DIRECTLY FROM THEM TO XXXXXX XXXXX. THE FORM STATES THAT THE MONEY WAS A CLASS 4 DISTRIBUTION, I THINK IT IS A CLASS G BECAUSE IT WAS ROLLED INTO THE IRA AND MY FATHER HAD TAKEN HIS ANNUAL DISTRIBUTION. IS THIS CORRECT AND IF SO HOW WOULD I EXPLAIN IT TO THE IRS, OR GET THE INSURANCE CO TO CHANGE THE CLASS RATING OF DISTRIBUTION?

Submitted: 591 days and 13 hours ago.

Category: Tax

Value: $15

Status: AWAITING CUSTOMER ACTION

Answer

XXXXXXXXXXX,
An inherited IRA is an IRA for the beneficiary but with the deceased person's name in the registration. The title on the account is usually "XXXX XXXXX Beneficiary of the Jim Jones Deceased IRA". If your account is registered this way at XXXXXX XXXXX then it has the correct registration. A direct rollover to an inherited IRA is not permitted from a deceased's IRA account (it is permitted from a qualified plan or 403(b)). However, a direct transfer is permitted from one inherited IRA to another inherited IRA. The annuity company could have established the account as an inherited IRA. If this is what you were trying to accomplish, and completed the proper transfer paperwork rather than direct rollover paperwork, then the annuity company erred by issuing a 1099-R. If they made an error then they could issue a corrected 1099-R to correct it. You should also check with XXXXXX XXXXX to confirm that they coded the funds coming in as a transfer rather than as a rollover.
I have assisted hundreds of clients who have transferred inherited IRAs from one institution to another.
See page 21 - http://www.irs.gov/pub/irs-pdf/p590.pdf

Edited by Bill on 4/10/2008 at 8:57 PM

Accepts:
Expert:	Bill
Pos. Feedback:	99.6 %
Answered:	4/10/2008

Enrolled Agent

EA, QPA, CHFC, CEBS, CLU - 29 years experience providing financial advice

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