By Brighton Samet, Moneta Tax Planning Consultant

Under guidance from the Internal Revenue Service (IRS), anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts had the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020. Instead of the normal 60-day limit, taxpayers had until August 31, 2020 to complete the rollover.

If you properly rolled over some or all of your IRA distributions, you may be wondering how the tax reporting will work. Your Form 1099-R will show the gross distributions for the year in Box 1. Unfortunately, you will not see the rollover reflected on this form. By May 31, you should receive a Form 5498 that will include documentation for the rollover that is also sent to the IRS. When preparing your tax return, the IRS instructions for Form 1040 (page 25) direct you to include the total distribution on Line 4a and to enter “Rollover” next to line 4b. The instructions also note that you may subtract the rollover amount when determining the taxable amount included on Line 4b. https://www.irs.gov/instructions/i1040gi

Since the Form 5498 may arrive after the tax filing deadline of April 15, we recommend you inform your tax preparer about any 2020 IRA rollovers so your distributions can be properly reported on the tax return.

While we hope you find it beneficial, this information is for informational purposes only and is not intended as tax advice.  Please consult your personal tax advisor or other appropriately credentialed professional for advice about your specific situation.

© 2021 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.