1099-R question

A participant died and his wife wanted to rollover his money to her IRA.  We provided Directive instructing plan to make check to Bof A, fbo the wife; we would report that on the 1099-R as a rollover, non-taxable event.

When we got copy of the check as evidence of distribution, it was payable to the WIFE.  This makes it a fully taxable event (about $14k with nothing withheld).

Assuming she puts the money into her BofA IRA within 60 days, how do we report this on the 1099-R?  Do we report it as taxable or as a rollover?  I have never encountered this before.

Can you return the check and have them re-issue it to the correct party?

You could just do the 1099R as a death distribution fbo the wife.  No withholding.  When she files her taxes she will have the BoA paperwork that the amount was rolled over.

Should there be an IRS inquiry, you should have the paperwork as to how the check was requested and how it was written.

Assuming, of course, that it is impossible to get the check reissued.

Yes to the Death Distribution on 1099-R, but on the form you have to indicate how much of the distribution is taxable.

It seems to me the plan has to report it as a taxable distribution, then if she rolls into IRA within the 60 days, she would account for that on her tax return.

Am I correct in that, or with proper documentation should the plan report it as non-taxable?

So we have confirmation that the wife deposited money to her IRA (within the 60 days).  With documentation of the IRA deposit:

1. Do we report this as taxable distribution on 1099-R and she then accounts for the IRA somehow in her tax return, or
2. Do we report this as a non-taxable distribution on 1099-R?

Another thing occurred to me.  Could any changes in the tax laws possibly affect this 60-day rule?  And if so might she be screwed?

It is reported as a taxable distribution and the participant reports it as received but non-taxable on her return.  It should not raise any red flags or otherwise cause a problem b/c the receiving IRA should issue a 5498 showing they received the money.

No, nothing changed to affect this and it really is not a big deal at all.  Other than the fact that someone screwed up and made everyone else jump through hoops to fix that screwup.  Annoying and really should be billable.