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Hello I received a 1099-R which was a inheritance from

Hello I received a 1099-R...
Hello

I received a 1099-R which was a inheritance from my mother who passed in 2012. This IRA was rolled over into my IRA account. My understanding is it is tax free. When I report the information on my 1040 it reflects a taxable amount but tells me not to e-file and submit Form 8606 to the IRS. Can I still e-file my tax information but leave it out of my 1040 and send in the 8606 information form, Nondeductible IRA's ?
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Answered in 15 minutes by:
3/10/2013
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thank you for your question, and thanks for using JustAnswer.com. I am a little confused by your situation, first because you cannot roll an inherited IRA into your own IRA. You can only take a distribution from the inherited IRA.

The IRS States:

If you inherit a traditional IRA from anyone other than your deceased spouse, you cannot treat the inherited IRA as your own. This means that you cannot make any contributions to the IRA. It also means you cannot roll over any amounts into or out of the inherited IRA. However, you can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of you as beneficiary.

Your inherited IRA is not tax free; you are taxed on the distributions from the inherited IRA unless it was a Roth IRA. The IRS further states "Like the original owner, you generally will not owe tax on the assets in the IRA until you receive distributions from it. You must begin receiving distributions from the IRA under the rules for distributions that apply to beneficiaries."

Form 8606 that you mention is used to report
  • Nondeductible contributions you made to traditional IRAs;

  • Distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs;

  • Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs; and

  • Distributions from Roth IRAs.

So, if you received a distribution from this IRA it's taxable. Form 8606 would be used if the distribution was from a Roth IRA.

If you are required to file form 8606 and you cannot efile because of this, you cannot efile and leave the information off your return and send it in separately. Everything must be filed together.

Please feel free to include any clarifications in this matter. It is my goal to make you a satisfied customer today. Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great day.

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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

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Customer reply replied 4 years ago

Let me ask this again.


 


I received Form 1099-R from Merrill Lynch as Custodian for the FBO Decd IRA FBO of Me - Michael Ice.


 


The account benefit is now mine simce my mother passed.


 


I did not transfer any IRA of hers to me or take any monies out of the IRA.


 


Her account is left to me managed by Merrill Lynch.


 


So at tax time I received a form 1099-R with the Gross Dist (line 1) and the Taxable Amount (line 2) being equal also showing an X ed line 2b as taxable amount not determined, a line 7 Distribution Code of 4 (desceased) and the IRA/SEP/SIMPLE box marked an X.


 


So my question is:


 


This is a tax free amount but I received this 1099-R so how do I report it?


 


 


 

Thank you for your question, and thanks for using JustAnswer.com.

Per XXXXX XXXXX (not the same as your plan holder, but they follow the same rules)

If you are a non-spouse beneficiary of a qualified retirement plan and elected to have your benefits roll over to an inherited IRA (after the original account owner’s death), you will receive a 1099-R reporting that amount under distribution code G4. The rollover received in the IRA will be reported on your 5498, which is issued in May 2013.

So, this 1099-R was just reporting that you rolled the assets in the account from your mother's account to your inherited account. This is not taxable to you. The "rollover" would then be reported to the IRS on form 5498 which is sent to the IRS in May.

This is not taxable to you. You would not report the distribution as taxable to you.

 

I would call your plan administrator and see why they issued you a 1099 that did not have the code G4 in box 7

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great day.

** Please take a moment to rate my response as "Excellent" so that I may receive credit for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site. This answer is not financial or legal advice, and must not be used as such. For financial and legal advice, please contact a local professional.*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16,581
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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