Proper Tax reporting for return of RMDs in 2020
Please clear up confusion related to return of 2020 RMD as a rollover. Client returned his 2020 RMD before the August 31, 2020 deadline. He received a 1099 for his RMDs that were distributed earlier in the year. The company does verify the return of the RMDs via a rollover. Obviously, the client reports the RMDs on the 1040, but what is the proper way to report the return of the RMDs so that it negates the taxability. How should the company report the return of the RMDs and how should the client report the return of the RMDs.
thank you
Permalink Submitted by Alan - IRA critic on Wed, 2021-03-03 18:05
For both this is handled like any other IRA distribution and rollover. The distribution goes on line 4 (for IRAs) of Form 1040, 0 on 4b, and “rollover” indicated next to 4b.
Permalink Submitted by Marvin Rauchbach on Thu, 2021-03-04 12:00
for the distribution, the company obviously issues a 1099, but for the rollover, what form or ducment is the company supposed to issue. thank you
Permalink Submitted by Alan - IRA critic on Thu, 2021-03-04 13:55
Form 5498, usually issued in May for contributions for prior year. The form will indicate whether the contribution is a regular IRA contribution, a rollover, a conversion, or repayment of a disaster distribution (CRD).