Suellen Howard

Thanks for the responses, we appear to have a consensus. I Agree the withholding should be reporting with Dist code 1. By the way, JOH, your explanation is not correct for box 2a, but thanks for looking at it.

These are traditional IRA to Roth IRA conversions where the owner requested withholding to cover the taxes owned due to the conversion. It can be either internal or external to another IRA custodian.

How should withholding be reported on a Roth conversion if under 59 1/2? We have 2 opinions. 1. If a conversion occurs for someone under 59.5 and there is withholding then report on 2 1099-Rs. One showing the distribution as code 2 and another saying the withholding was distributed to the client as code 1. 2. The conversion both the cash and withholding would fall under the exception to excise tax withholding so both legs should be reported under a distribution code 2. Which is right?

If the acocunt owner does not wish to sell the painting, then he/she would need to find an IRA trustee that will accept the painting and do a direct rollover to the IRA. I agree with the others that withholding applies otherwise.

If an IRA or QP participant is under 59 1/2 and takes a COVID distribution. Should the trustee report on 1099-R distribution code 1 or 2?