Guest royboy11 Posted February 18, 2001 Posted February 18, 2001 After reading the IRS instructions for forms 8606, 5329 and 1099-R/5498 several times I am thoroughly confused. I have received two 1099-R forms marked in the upper right corner for the year 2000. Roth IRA History: 1998 I opened and contributed $2,000 to a Roth IRA in 1998. Not limited due to income. No rollover or conversion. Roth IRA Value as of 12/31/1998: $2,000 1999 I contributed $2,000 to the Roth IRA in 1999. Limited due to income. This is now an over contribution due to income limitations. Principle and earnings were pulled out on April 30, 2000. I reported the total distribution on line 15a and the earnings ($945) on line 15b on the 1040 for 1999. I over estimated the earnings on line 15b by about $112, since I wasn't sure at filling time of the exact amount. Now I receive a 1099-R marked for year 2000, it has a code "P" in box 7. I think they may have made a mistake on the 1099-R as the amount in box 1 is $2,833 and the taxable amount in box 2a is also $2,833. Is this correct? Shouldn't the taxable amount in box 2a have been only the earnings, in this case $833? My broker insists it is correct but I wonder if they are confused as I am. Since I received this 1099-R marked for tax year 2000 does this mean I should have reported this income for tax year 2000 and not tax year 1999? This would mean I need to amend the 1999 return, right? I did not pay the 6% penalty for an over contribution in 1999, should I have paid this $120 or am I somehow exempt from this? Do I have to amend year 1999 to adjust for the over reporting of the $112 and/or the $120 penalty? I've tried to fill out the 8606 form and the 5329 but can't seem to figure them out, what should they look like in a circumstance like this? Should they be filled out for year 1999 or year 2000? I know I will need at least the 8606 in the future so I want to get this one right. Roth IRA Value as of 12/31/1999: $5,939 The second 1099-R was for a regular IRA I revoked within 7 days in December 1999, it included $ 1,803 (box 1) and $3 in taxable amount (Box 2a). On what line of the 1040 does this income get reported to? What should the code in box 7 be of the 1099-R for a circumstance like this, they have marked it as a "P" (Box 7, with an X in the IRA/SEP/SIMPLE), Is this correct? Do I even need to report this, as since it was revoked, is it as if it never happened? Should the earnings have been reported for tax year 1999 or since the 1099-R was issued in 2000 should the earnings be reported for tax year 2000? Do I need to fill out a 8606 and/or 5329 for this as well, for which years? This income was not reported on my 1999 return. Do I have to amend year 1999 to adjust for this unreported amount? Regular IRA Value as of 12/31/1999: $1,803 Funds transferred on 01/03/2000 Regular IRA Value as of 12/31/2000: $0 Closed out 2000 I contributed $2,000 to the Roth IRA. Not limited due to income. Roth IRA Value as of 12/31/2000: $2,829 So there are the facts, in general what forms do I need to fill out and if they are the 8606 or 5329 I would appreciate them being filled out for me by someone who knows how to do these. I can give you a fax number where to send a the completed forms. Then I'll just copy them over to my forms.
Appleby Posted February 23, 2001 Posted February 23, 2001 Oh-boy Royboy. I was waiting to see if anyone wlese would take this. I think no-one did because of the filling out of the form bit- there could be tax implications with that piece y'know. I included your query with my response, to ensure that I cover all the areas that I can. My response will be in BLOCK capitals and will be embedded in your query. ********************************************* Originally posted by royboy11 After reading the IRS instructions for forms 8606, 5329 and 1099-R/5498 several times I am thoroughly confused. I have received two 1099-R forms marked in the upper right corner for the year 2000. Roth IRA History: 1998 I opened and contributed $2,000 to a Roth IRA in 1998. Not limited due to income. No rollover or conversion. Roth IRA Value as of 12/31/1998: $2,000 1999 I contributed $2,000 to the Roth IRA in 1999. Limited due to income. This is now an over contribution due to income limitations. Principle and earnings were pulled out on April 30, 2000. I reported the total distribution on line 15a and the earnings ($945) on line 15b on the 1040 for 1999. I over estimated the earnings on line 15b by about $112, since I wasn't sure at filling time of the exact amount. Now I receive a 1099-R marked for year 2000, it has a code "P" in box 7. I think they may have made a mistake on the 1099-R as the amount in box 1 is $2,833 and the taxable amount in box 2a is also $2,833. Is this correct? Shouldn't the taxable amount in box 2a have been only the earnings, in this case $833? My broker insists it is correct but I wonder if they are confused as I am. *********************************************************** MY RESPONSE TO THIS PIECE YOU ARE RIGHT. THE TAXABLE AMOUNT SHOULD BE ONLY THE EARNINGS, I.E. ONLY $833 SHOULD BE IN BOX 2a. CONTACT YOUR IRA CUSTODIAN IMMEDIATELY AND HAVE THEM ISSUE A CORRECTED 1099-R. MAKE SURE YOU SPEAK WITH SOMEONE WHO UNDERSTANDS THE IRS INSTRUCTIONS *********************************************************** Since I received this 1099-R marked for tax year 2000 does this mean I should have reported this income for tax year 2000 and not tax year 1999? This would mean I need to amend the 1999 return, right? I did not pay the 6% penalty for an over contribution in 1999, should I have paid this $120 or am I somehow exempt from this? Do I have to amend year 1999 to adjust for the over reporting of the $112 and/or the $120 penalty? *********************************************************** MY RESPONSE TO THIS PIECE YOU RECEIVED THE 1099-R FOR 2000 BECAUSE THE DISTRIBUTION WAS PROCESSED IN 2000. HOWEVER, THE CODE 'P' IN BOX 7 DENOTES THAT THE EARNINGS ARE TAXABLE IN THE PREVIOUS YEAR, WHICH IS 1999. YOU ARE NOT REQUIRED TO PAY THE 6% AS YOU CORRECTED THE EXCESS AMOUNT BEFORE YOUR TAX FILING DEADLINE. *********************************************************** I've tried to fill out the 8606 form and the 5329 but can't seem to figure them out, what should they look like in a circumstance like this? Should they be filled out for year 1999 or year 2000? I know I will need at least the 8606 in the future so I want to get this one right. ********************************************************** THE 8606 IS COMPLETED WHEN YOU TAKE A DISTRIBUTION FROM A ROTH IRA. CHECK THE LIST ON THE FIRST PAGE- UPPER LEFT HAND CORNER, - HERE IT TELLS YOU WHO SHOULD FILE 8606 ***************************************************** Roth IRA Value as of 12/31/1999: $5,939 The second 1099-R was for a regular IRA I revoked within 7 days in December 1999, it included $ 1,803 (box 1) and $3 in taxable amount (Box 2a). On what line of the 1040 does this income get reported to? What should the code in box 7 be of the 1099-R for a circumstance like this, they have marked it as a "P" (Box 7, with an X in the IRA/SEP/SIMPLE), Is this correct? ******************************************************** I ASSUME FROM THIS INFORMATION THAT THE CONTRIBUTION AMOUNT WAS $1,800. IF SO, THE AMOUNTS IN BOX 1 AND 2a IS CORRECT. THE AMOUNT IN BOX 2a IS THE EARNINGS, WHICH IS TAXABLE. THE CODE IN BOX 7 SHOULD BE A CODE 8. THE IRS INSTRUCTIONS FOR FILING 1099-R STATES THAT A CODE '8' MUST BE USED FOR AN IRA REVOCATION , EVEN IS THE CONTRIBUTION WAS MADE IN THE PRIOR YEAR AND REVOKED THE YEAR FOLLOWING. EG.. CONTRIBUTION MADE DECEMBER 29 AND REVOKED WITHIN 7 DAYS IN JANUARY THE NEXT YEAR. ******************************************************* Do I even need to report this, as since it was revoked, is it as if it never happened? Should the earnings have been reported for tax year 1999 or since the 1099-R was issued in 2000 should the earnings be reported for tax year 2000? Do I need to fill out a 8606 and/or 5329 for this as well, for which years? This income was not reported on my 1999 return. Do I have to amend year 1999 to adjust for this unreported amount? **************************************************** I DOUBT THE IRS WILL QUIBBLE OVER $3. 8606 IS FOR TRANSACTIONS INVOLVING NON-DEDUCTIBLE CONTRIBUTIONS OR DISTRIBUTIONS THEREOF. YOU DONT NEED IT. 5329 IF USUALLY FILED WHEN YOU NEED TO PAY ADDITONAL TAX ON YOUR DISTRIBUTION, E.G. THE 6% WHICH DOES NOT SEEM TO APPLY TO YOU. THE 10% PENALTY THAT WOULD BE DUE ON THE EARNINGS ON YOUR EXCESS CONTRIBUTION 9 DISTRIBUTION THEREOF) IS REPORTED ON LINE 54 OF YOUR 1040- SEE THE 1040 INSTRUCTIONS FOR THIS LINE ************************************************** Regular IRA Value as of 12/31/1999: $1,803 Funds transferred on 01/03/2000 Regular IRA Value as of 12/31/2000: $0 Closed out 2000 I contributed $2,000 to the Roth IRA. Not limited due to income. Roth IRA Value as of 12/31/2000: $2,829 So there are the facts, in general what forms do I need to fill out and if they are the 8606 or 5329 I would appreciate them being filled out for me by someone who knows how to do these. I can give you a fax number where to send a the completed forms. Then I'll just copy them over to my forms. ********************************************** 'HOPE I COVERED EVERYTHING. IF YOU HAVE FOLLOW-UP QUESTIONS, JUST ASK. IT MAY TAKE MORE THAN A DAY FOR ME TO RESPOND AS I AM TRAVELLING ON BUSINESS FOR THE NEXT FEW DAYS. HOWEVER, I WILL CHECK IN WHEN TIME PERMITS Life and Death Planning for Retirement Benefits by Natalie B. Choatehttps://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/ www.DeniseAppleby.com
Guest royboy11 Posted February 24, 2001 Posted February 24, 2001 Thank you for responding I really appreciate it. Just to summarize what you are saying: I need not include the information from the 1099-R forms on my 2000 return. In other words, I am free to go ahead and file my 2000 return. I really want to do this since I am receiving a refund. I was waiting until I got some clarification on whether or not I needed to include some of this "1099-R" information. So based on what I have said here, you are saying my 2000 return need NOT include either a 8606 form or a 5329 form, correct? I have just today received a corrected 1099-R form, although it is still not 100% correct, they at least are closer to the correct taxable amount in box 2a and the box 7 code is now correct, a "P". I will call them again. About the Roth IRA over contribution, remember I applied to have it pulled out on April 1, 2000 however, it was not actually transferred out of my account until April 30, 2000 (after the tax year filling date of April 17, 2000). Do you still say I owe no penalty tax as indicated on form 5329? I still may need help filling out the 8606 form Part III as I need to establish my basis, for future tax returns and for any future IRA distributions. I am still having trouble with this. So for my 1999 it looks as thought I need to file an amended return with the corrected taxable earnings amount on line 15b, then I should be all set. I will also need to amend my state return. Turbo Tax does support this.
Guest royboy11 Posted February 25, 2001 Posted February 25, 2001 Also, is the Regular IRA revocation subject to the 10% early withdrawal tax, under section 72(t),(q)or(v)?
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