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Roth IRA Distirbution

December 09, 2016 • BK • Log In to Post Comments

Client received an 1099 R for 9700 for 2015. On 4/10/2015 client contributed 5500 toward 2014 and 5500 towards 2015, On 8/11/2015 he took out all the money 9700 from the account - 1300 is loss.

on 9/15/2015 client bought a home.

1300 loss goes on to Schedule A under 2% loss

how to handle the ditirbution  and which forms are impacted?

there is no income impact as it is a ROTH contribution

There is no panelty for 2014 amount as we can use the frist time home buyer exepction

There is no panelty for 2015 amount becasue it was taken out in 2015 itself - how to handle this and which form are impacted.

in 1099 R IRA/Sep/Simple IR check box is not checked - becasue of the the software is taking it line 16 insted of line 15- how to handle this.






You should have $9,700 shown on Form 1040, line 15a, but $0 shown on line 15b.  You should not have any amounts shown on lines 16a or 16b.  No other forms should be impacted.  You didn't state what codes are shown in Box 7 of your 1099-R, but they are likely codes J and 8, which should produce the result I just mentioned.

It is okay that the IRA/SEP/SIMPLE box is not checked.  The instructions to Form 1099-R states: "For distributions from a Roth IRA, report the gross distribution in box 1 but generally leave box 2a blank.  Check the "Taxable amount not determined" box in box 2b.  Enter Code J, Q, or T as appropriate in box 7.  Do not use any other codes with Code Q or Code T.  you may enter Code 8 or P with Code J....  It is not necessary to mark the IRA/SEP/SIMPLE checkbox.

Thanks Mike- the code mentioned is in BOX 7 is J. IT is only J and ther is no 8.

on further probing client stated there is $42 is stillin the account.

So that means there is no impact to from 8606 and or 5329.


No, there should be no impact on the 8606 or the 5329.


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