1099R Question

[Guest JimiB]

1099R Question. I transfered a Roth Ira from one mutual fund company (Harbor Fund) to another mutual fund company (Vanguard) in 2000. The transfer was a Direct Transfer or sometimes referred to as a Direct Rollover. I did not receive the funds, they were moved direct from one trustee to another. Harbor has now send me a 1099R with a distribution code of 5J shown in box 7 of the form. I believe this is in error. If I was supposed to receive a 1099R is not the code wrong? Please advise. Thanks

[Mary Kay Foss]

The instructions for 1099-R say that Code 5 is a Prohibited Transaction and Code J is a distribution from a Roth IRA.

The Form is supposed to have a telephone number that you can call to inquire about the Form. Call the custodian and ask them to explain; you may have to be transferred to someone with more authority to get an adequate explanation or a promise to correct.

The Forms aren't sent to the IRS until 2/28/2001 so you're doing the right thing by checking the form and getting back to the custodian before the end of February.

The other strategy is to report it on your 2000 Form 1040 in box 15a and show a zero on 15b. You would also right ROLLOVER in the margin to the left of line 15.

Good Luck.

[John G]

You may also want to document the transfer by including your letter of request and the opening statement of the new account as part of your tax return. In case of an audit or querie from the IRS you can point them to the additional documentation attached to your return.

My wife's 1040 has twice generated queries because the wrong box was checked or wrong code provided on IRS submissions from employers or custodians. It is a straight forward issue to resolve but with a high hassle factor.

If you post again, please identify the custodian.