How do I calculate 1099-R box 2a for an inherited Roth IRA distribution?
My mother-in-law passed away earlier this year, and my husband received a full distribution from her Roth IRA that was only about 3 years old. When the 1099-R arrived, it shows $28,500.65 in box 1 (gross distribution), but box 2a is completely blank. Box 2b has "Taxable amount not determined" checked, and "Total distribution" is also checked. I've searched everywhere online about how we need to manually calculate the value for box 2a, but can't find actual instructions for doing this calculation. We know the total amount contributed to this Roth IRA was $27,000. The distribution code in Box 7 is code 4. Do we just subtract the original contribution from the gross distribution? So would it be $28,500.65 - $27,000 = $1,500.65 as the taxable amount? This seems too simple, but I can't find clear guidance anywhere. Any help would be appreciated!
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Sean O'Connor
When dealing with an inherited Roth IRA that's less than 5 years old, you're on the right track. The earnings portion (not the contributions) will be taxable when distributed if the original Roth IRA was established less than 5 years before the distribution date. The basic calculation is indeed as you suggested - subtract the original contribution amount from the gross distribution to find the earnings. So in your case, $28,500.65 - $27,000 = $1,500.65 would be the taxable amount that should go in Box 2a. The reason the issuer left Box 2a blank and checked "Taxable amount not determined" is because they don't track the contribution basis - they only know the current value. It's the taxpayer's responsibility to know and report the original contribution amount. The Code 4 in Box 7 indicates a death distribution to a beneficiary, which is correct in this situation.
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Zara Ahmed
•Thanks for the explanation, that makes sense. But I'm still confused about the 5-year rule. Does the 5-year countdown start when the original owner first opened ANY Roth IRA or when they opened THIS specific Roth IRA? My dad had other Roth accounts for decades but opened this particular one about 3 years ago.
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Sean O'Connor
•For the 5-year rule with inherited Roth IRAs, it's based on when the original owner first established ANY Roth IRA, not just the specific account you inherited. So if your father had other Roth IRAs that were established more than 5 years before his passing, then all the Roth IRAs would be considered to have satisfied the 5-year rule. In that case, assuming your father had an earlier Roth IRA that was more than 5 years old, the entire distribution would actually be tax-free, including the earnings. You might want to check if your father had any earlier Roth IRA accounts that would satisfy this requirement.
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Luca Conti
I went through exactly this situation last year and was super confused by the blank Box 2a. I found this great tool at https://taxr.ai that analyzes your tax forms and explains exactly what you need to do with them. I uploaded my 1099-R and it immediately explained the calculation for inherited Roth IRAs under the 5-year rule and showed me where to report it on my tax return. The site explained that since the Roth was less than 5 years old, I needed to report the earnings portion (total distribution minus contributions) as taxable income. It even flagged that my situation might qualify for an exception depending on how long my relative had ANY Roth IRA, not just the specific one I inherited. The explanations were way clearer than what I found on the IRS website.
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Nia Johnson
•Does it work with other tax forms too? I've got a bunch of weird investment documents this year and have no idea what to do with them.
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CyberNinja
•Sounds interesting but I'm always wary of uploading my financial docs to random websites. Is it secure? Do you have to create an account or anything?
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Luca Conti
•It works with pretty much all tax forms - W-2s, 1099s of all types, K-1s, etc. It was especially helpful with some crypto tax forms I got that were completely confusing. The site uses bank-level encryption and doesn't store your documents after analysis. You do need to create an account but it's just to save your analysis results if you want to come back to them later. You can also just upload a form, get the explanation, and be done with it.
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CyberNinja
Update on my tax situation after checking out taxr.ai from the suggestion above - it actually cleared everything up immediately! I was overthinking the whole calculation. Turns out my husband's mom had opened her first Roth IRA back in 2010, even though this particular account was newer. The site confirmed that since ANY Roth IRA was established more than 5 years ago, the entire distribution is tax-free! I would have incorrectly reported the earnings as taxable income without this clarification. The site also explained exactly where to report this on our tax return even though the 1099-R doesn't show the right taxable amount. Definitely saved us from making an expensive mistake!
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Mateo Lopez
If you're still having trouble with this calculation or have follow-up questions, calling the IRS directly might help. But good luck actually getting through to them... I tried calling about a similar inherited IRA issue and spent HOURS on hold. I finally used https://claimyr.com after seeing it recommended here, and they actually got me connected to an IRS agent in about 20 minutes instead of the usual 2+ hour wait. There's a video showing how it works at https://youtu.be/_kiP6q8DX5c. The agent confirmed exactly what I needed to do with my 1099-R calculation and made sure I understood which exceptions might apply in my situation.
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Aisha Abdullah
•Wait, so this service somehow gets you through the IRS phone queue faster? How does that even work? Sounds too good to be true.
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Ethan Davis
•I dunno, seems sketchy. The IRS phone system is the same for everyone. How would some random service get you ahead in line? I'd rather just wait on hold than pay for something that probably doesn't work.
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Mateo Lopez
•It actually does work! The service uses automated technology to navigate the IRS phone system and wait on hold for you. When they finally reach a human IRS agent, you get a call connecting you directly. They don't cut the line or anything like that - they're just waiting on hold so you don't have to. It saved me from having to sit next to my phone for hours afraid to miss the call when an agent finally picked up. I was able to go about my day and just got a call when an actual person was ready to talk.
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Ethan Davis
I'm following up about that Claimyr service I was skeptical about. I finally broke down and tried it last week when I absolutely needed to talk to someone at the IRS about inherited IRA rules similar to this situation. I was honestly shocked that it worked exactly as advertised. Got a call back in about 35 minutes with an actual IRS agent on the line. The agent walked me through exactly how to handle the taxable portion calculation on my 1099-R and confirmed what others said here about the 5-year rule applying to ANY Roth IRA the original owner had established. Definitely worth it considering I had already wasted nearly 3 hours on hold across two previous attempts.
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Yuki Tanaka
Don't forget that even if the earnings are taxable (the difference between distribution and contributions), they might not be subject to the 10% early withdrawal penalty. Code 4 in Box 7 indicates a death distribution, which is one of the exceptions to the penalty. You'll still pay regular income tax on the earnings if the 5-year rule wasn't satisfied, but at least you avoid the penalty.
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Anastasia Sokolov
•Thank you for mentioning that! I was worried about potential penalties too. So just to confirm: we'll only pay regular income tax on the $1,500.65 earnings portion (assuming we determine the 5-year rule wasn't met), but no additional 10% penalty because it's a death distribution. Is that right?
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Yuki Tanaka
•Yes, that's exactly right. The earnings portion would be subject to regular income tax only, with no additional 10% early withdrawal penalty. The death distribution code 4 provides an automatic exception to the penalty. If you do find out that your mother-in-law had established any Roth IRA more than 5 years before her passing (counting from the first tax year a contribution was made), then even the earnings would be tax-free.
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Carmen Ortiz
I'm pretty sure you need to file Form 8606 along with your return when dealing with distributions from inherited Roth IRAs, especially when there's potentially taxable amounts involved. The form helps document your basis calculation. Has anyone here had to fill that out for a similar situation?
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MidnightRider
•Yes, you're right about Form 8606, but Part III is specifically for Roth IRA distributions. It walks you through the calculation to determine the taxable amount. It's fairly straightforward - you'll enter the total distribution, then your basis (the contribution amount), and it will calculate the taxable portion for you.
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