Combining 1099-Rs for child support distributions

[Guest SSS909]

A client receives a 1099-R for his distribution of pension benefits. Another 1099-R is issued for the child support distributed pursuant to a QDRO. This 1099-R is sent to the ex-wife, but his social security number is used on the 1099-R. The client wants to "combine" the 1099s so that only one is issued and issued to him. Since he's already paying the taxes on the child support distribution, I don't see why these couldn't be combined. Does anyone see something I'm overlooking?

[JanetM]

They can't be combined if the distribution code is different and the tax treatment is different. Example - EE pension might be code 1 and the QDRO payment might be 2.

[Kimberly S]

I agree with Janet about the coding. But I'm curious why a 1099-R with the participant as the recipient would ever be mailed to the participant's ex-spouse.

[Guest SSS909]

Thanks for your replies. After talking with my client, it appears that he wanted to be receiving both 1099-R or at least have the one he receives for his benefits distribution to show the total amount being distributed from his account and not just what he is receiving. We're currently working to take care of this or at least request that he receive both 1099-R

[JanetM]

Kim the ex probably gets is since that is where the payment is sent.

[david rigby]

I may misunderstand the facts, but it appears the participant wants to bear the taxation burden of the QDRO amount. However, IRC 402:

(e) Other rules applicable to exempt trusts

(1) Alternate payees

(A) Alternate payee treated as distributee

For purposes of subsection (a) and section 72, an alternate payee who is the spouse or former spouse of the participant shall be treated as the distributee of any distribution or payment made to the alternate payee under a qualified domestic relations order (as defined in section 414(p)).

appears to assign that responsiblity to the Alternate Payee. Note the word "shall".

[Guest mjb]

I may misunderstand the facts, but it appears the participant wants to bear the taxation burden of the QDRO amount. However, IRC 402:

(e) Other rules applicable to exempt trusts

(1) Alternate payees

(A) Alternate payee treated as distributee

For purposes of subsection (a) and section 72, an alternate payee who is the spouse or former spouse of the participant shall be treated as the distributee of any distribution or payment made to the alternate payee under a qualified domestic relations order (as defined in section 414(p)).

appears to assign that responsiblity to the Alternate Payee. Note the word "shall".

Under the assignment of interest rule, retirement income is taxed to the person who earns it, i.e., the employee, not the payee, unless there is a statutory exception. IRC 402(e) deems the spouse who recieves retirement income as the AP under a QDRO to be the person who is taxed under IRC 72 and therefore is eligible to rollover the funds to an IRA. Where the AP under a QDRO is a child, the employee will be taxed under the assignment of interest rule and no rollover is allowed. There is an old IRS pronouncement (Notice 89-25?) that explains the difference in taxation.