Conversions & Advanced Portability

Question 1

What are the characteristics of a conversion?

Answer 1

A reportable, taxable movement of assets from a Traditional or SIMPLE IRA to a Roth IRA.

Question 2

What are the characteristics of a direct conversion?

Answer 2

No constructive receipt of the assets, no 60-day rule, and no one-per-12-month rule

Question 3

What are the characteristics of an indirect conversion?

Answer 3

Constructive receipt of the assets, 60-day rule applies, and no one-per-12-month rule

Question 4

Which IRS reporting forms are required from the financial organization and the IRA owner to properly report a conversion?

Answer 4

Form 1099-R, Form 5498, and Form 8606

Question 5

Which box on Form 1099-R is used to report the gross distribution for a direct or indirect conversion?

Answer 5

Box 1

Question 6

Which box on Form 1099-R is used to report the federal withholding for a direct or indirect conversion?

Answer 6

Box 4

Question 7

Which box on Form 1099-R is used to report the IRS reporting code for a direct or indirect conversion?

Answer 7

Box 7

Question 8

For a conversion, the IRA/SEP/SIMPLE box is checked on Form 1099-R.

Answer 8

True

Question 9

Linda, age 38, asked her financial organization to withhold 15 percent on a gross distribution of $10,000 that was directly converted to a Roth IRA. Which IRS reporting code is used to report the amount directly converted to the Roth IRA?

Answer 9

Code 2

Question 10

Linda, age 38, asked her financial organization to withhold 15 percent on a gross distribution of $10,000 that was directly converted to a Roth IRA. What amount should the financial organization enter in Box 1 of Form 1099-R to report the amount directly converted to the Roth IRA?

Answer 10

$8,500.00

Question 11

Linda, age 38, asked her financial organization to withhold 15 percent on a gross distribution of $10,000 that was directly converted to a Roth IRA. Which IRS reporting code is used to report the amount withheld?

Answer 11

Code 1

Question 12

Linda, age 38, asked her financial organization to withhold 15 percent on a gross distribution of $10,000 that was directly converted to a Roth IRA. What amount should the financial organization enter in Box 1 of Form 1099-R to report the amount withheld?

Answer 12

$1,500.00

Question 13

Which box on Form 5498 is used to report the amount converted for a direct or indirect conversion?

Answer 13

Box 3

Question 14

Which box on Form 5498 is used to report the fair market value of a Roth IRA that has received a conversion contribution?

Answer 14

Box 5

Question 15

To report a conversion contribution on Form 5498, which box in Box 7 is checked?

Answer 15

Roth

Question 16

From a tax perspective, why must the distribution and conversion contribution be reported to the IRS?

Answer 16

The movement of assets from a Traditional or SIMPLE IRA is generally a taxable event; therefore, Form 1099-R must be created to report the distribution, and Form 5498 must be created to report the corresponding conversion.

Question 17

What is the deadline for individuals to deposit military death gratuity and group life insurance payments as tax-free rollovers?

Answer 17

1 year

Question 18

How is a distribution for a qualified reservist distribution reported?

Answer 18

Code 1 on Form 1099-R

Question 19

What is the maximum amount that can be distributed from an IRA or employer plan for the birth or adoption of a child?

Answer 19

$5,000

Question 20

Within how many years must emergency expenses distributions be repaid?

Answer 20

3 years