"The Pension Specialists" Blog

Email Guidance – Preparing IRS Forms for a Roth IRA Conversion

Q-1 One of our other IRA staff, received this IRA paper work and handled this closure. The accountholder is contacting me now as they never received a 1099-R from us.

It appears this was to be a conversion of traditional IRA funds at our bank to a Roth with JH Investors. Our staff treated it as a transfer, thus not generating him a 1099-R form.

I believe this should have been completed as a Distribution on our end (converting traditional funds to Roth funds) thus we would have generated a 1099-R which would match up with the 5498 he received. Would you agree with that?

A-1 Yes. The paper work. from JH Investors clearly indicated the funds were being moved from a traditional IRA with Mainstreet Savings into a Roth IRA with JH Investors. Consequently, your bank was/is required to prepare a 2018 Form 1099-R reporting this special transfer distribution as taxable, but not subject to the 10% tax if the person was under age 59½.

Although this was a special transfer transaction, it is a reportable transfer in contrast to a transfer which is not reportable. The IRS defines many transfers as not being reportable, but not this transfer.

A reportable transaction is one which the IRS says must be reported.