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Rollover from traditional IRA to traditional IRA

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Level 1

I have a 1099-R from a traditional IRA with code 7 in box 7 and the full amount in box 2a. This was a direct rollover from a traditional IRA to traditional IRA. The CFP said because they reported it on 5498 on line 2 that a corrected 1099-R is not needed. I thought this was supposed to be code G and zero in 2a. Any thought?

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Level 15

Show it as a rollover in the software and move on to the next return.  It isn't a big deal as long as you know that it was actually rolled over.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.

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Highlighted
Level 15

Show it as a rollover in the software and move on to the next return.  It isn't a big deal as long as you know that it was actually rolled over.

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.

View solution in original post

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Level 15
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Level 12

For this: "The CFP said because they reported it on 5498 on line 2 that a corrected 1099-R is not needed."


I would get copies of Both 5498, as the supporting documentation.


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Level 1
I have both but I was just trying to confirm the proper procedure.  The 1099/5498 instructions suggest it's either one or the other not both. Thanks.
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Level 2

I had this situation in 2018. Marked it as a rollover, non-taxable. Now have a letter from the IRS for the full amount as taxable...

Trying to get the 5498 to use for backup...

This is a big deal.

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Level 11

Why are you taking tax advice from a CFP ("Commissions Fatten Pockets")?  The 5498 is from the new trustee, right?  How is IRS supposed to know that it's the same money shown on the 1099R from the former trustee?  It could have been paid out in another year, or contributed more than 60 days after a check to the taxpayer was cashed.  

But the problem is created by the former trustee, which was probably the cheapest company that the CFP could find.  I had a client today whose IRA is with a major clearing house (Raymond James) that refuses to withhold state income tax.  My solution would be to move the account, but you don't get to be successful in that business without being a slick talker.  

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Level 12

 5498 is issued when there is money In.

1099-R is issued when there is money Out.

On the tax form, you properly enter the data to show the reality of what happened. And you should have what is required to answer the IRS, because you reviewed the reality when working on the tax form.

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"Level Up" is a gaming function, not a real life function.
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Level 11

To the contrary, Form 1099-R is NOT issued when there is money Out, if it is a trustee-to-trustee IRA transfer.  This should be apparent to anyone, even CFPs, who can read instructions in English:

"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, . . ."

Not surprisingly, when IRS sees a 1099-R from an IRA, it concludes that it must not have been a trustee-to-trustee transfer.  I don't want the client to contact me in 18 months because of a letter from IRS, even though I have what is required to answer it.  I don't work for free, the client shouldn't have to pay for the trustee's mistake, and the CFP is probably driving a bus since the Crash of 2020.  

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