IRA Reporting & Legal Compliance

Question 1

On August 12, 2023, Justine, age 39, requested a distribution of$28,500 from her Traditional IRA at ABC Bank. She also elected to have 10 percent withheld for federal income taxes. She deposited the money into her checking account. On September 10, 2023, she entered Up North Financial to establish a new Traditional IRA with a rollover contribution of $28,500 (Justine made up the withheld amount out of pocket). The balance of her new Traditional IRA on December 31, 2023, was $30,200. What amount should be reported in Box 2 of the 5498?

Answer 1

$28,500

Question 2

On August 12, 2023, Justine, age 39, requested a distribution of$28,500 from her Traditional IRA at ABC Bank. She also elected to have 10 percent withheld for federal income taxes. She deposited the money into her checking account. On September 10, 2023, she entered Up North Financial to establish a new Traditional IRA with a rollover contribution of $28,500 (Justine made up the withheld amount out of pocket). The balance of her new Traditional IRA on December 31, 2023, was $30,200. What amount should be reported in Box 5 of Form 5498?

Answer 2

$30,200

Question 3

On April 12, 2023, Karen, age 67, made a $4,000 contribution to her Roth IRA for 2022. The balance in her Roth IRA before the contribution was $13,300. On October 21, 2023, Karen realized she was not eligible for the Roth IRA contribution and chose to removeit. The balance in her account on October 21, 2023, was $19,150.Karen had not taken any distributions and had made no other contributions. When the distribution was taken, Karen elected to waive federal withholding. What amount should be reported in Box2a?

Answer 3

Box 2a should be left blank.

Question 4

On April 12, 2023, Karen, age 67, made a $4,000 contribution to her Roth IRA for 2022. The balance in her Roth IRA before the contribution was $13,300. On October 21, 2023, Karen realized she was not eligible for the Roth IRA contribution and chose to removeit. The balance in her account on October 21, 2023, was $19,150.Karen had not taken any distributions and had made no other contributions. When the distribution was taken, Karen elected to waive federal withholding. When the distribution was taken, Karen elected to waive federal withholding. What distribution code should be reported in Box 7?

Answer 4

T

Question 5

Tabatha Olson has an IRA at Sunshine Financial Organization.Tabatha died on July 29, 2023. Her IRA’s FMV on this date was$35,002. By December 31, 2023, the IRA’s FMV increased to$36,000. Tabatha’s two beneficiaries, her children, Quincy and Madison, are each entitled to 50 percent of the IRA. In May 2024,Sunshine Financial Organization generated 2023 Forms 5498 using Method 1, it showed $_______________ as the date of death FMVon Tabatha’s Form 5498 and $_______________ as the December31 FMV on each beneficiary’s Form 5498.

Answer 5

$35,002; $18,000

Question 6

Tabatha Olson has an IRA at Sunshine Financial Organization.Tabatha died on July 29, 2023. Her IRA’s FMV on this date was$35,002. By December 31, 2023, the IRA’s FMV increased to$36,000. Tabatha’s two beneficiaries, her children, Quincy and Madison, are each entitled to 50 percent of the IRA.
In May 2024, Sunshine Financial Organization generated 2023 Forms 5498 using Method 2, Sunshine Financial Organization must generate a Form 5498 for Tabatha showing an FMV of$_______________ and a Form 5498 for each beneficiary showingan FMV of $________________. The financial organization also must notify the decedent’s estate that the executor may request a date of death valuation.

Answer 6

$0.00; $18,000

Question 7

Which of the characteristics listed below apply to a power of attorney?

Answer 7

a. Effective during the IRA owner’s lifetime
b. Effective if the IRA owner’s mental status is competent
c. Effective if the IRA owner’s mental status is incapacitated
d. Individual defines the scope
f. Individual defines the duration
h. Individual creates the power

Question 8

Which of the characteristics listed below apply to a guardian or conservator?

Answer 8

a. Effective during the IRA owner’s lifetime
c. Effective if the IRA owner’s mental status is incapacitated
e. Court determines the scope
g. Court determines the duration
i. Court creates the power

Question 9

Sue Jones, age 61, took a distribution from her Traditional IRA on June 25, 2023. On April 2, 2024, Sue realized that her withdrawal was reported incorrectly as an early distribution. What IRS forms will she need to correct the reporting for her IRA distribution?

Answer 9

2023 Form 1099-R and 2023 Form 1096

Question 10

Using the 2023 General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) as a guide, and with the help of your textbook, answer the following questions.
What distribution code is used to report an early distribution?

Answer 10

Code 1

Question 11

Using the 2023 General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) as a guide, and with the help of your textbook, answer the following questions.
What IRS form should always accompany a corrected tax form?
a. Form 1040
b. Form 1042
c. Form 8606
d. None of the above

Answer 11

d. None of the above

Question 12

Sue Jones, age 61, took a distribution from her Traditional IRA on June 25, 2023. On April 2, 2024, Sue realized that her withdrawal was reported incorrectly as an early distribution. What IRS distribution code should be reported for Sue’s Form 1099-R?

Answer 12

Code 7

Question 13

John Wayne, age 39, took a distribution from his Roth IRA on January 30, 2023. John’s Social Security number is 111-11-2221.When he was reviewing the 2023 Form 1099-R that he received from Great Lake Financial Organization, he noticed that his Social Security number was incorrect; it was reported as 111-11-2222. How many tax forms will it take to complete this correction?

Answer 13

Two 2023 Forms 1099-R and one 2023 Forms 1096

Question 14

John Wayne, age 39, took a distribution from his Roth IRA on January 30, 2023. John’s Social Security number is 111-11-2221.When he was reviewing the 2023 Form 1099-R that he received from Great Lake Financial Organization, he noticed that his Social Security number was incorrect; it was reported as 111-11-2222.
How will the corrected form(s) be completed?

Answer 14

Two 2023 Forms 1099-R – one form should have the
Corrected
box marked, the wrong Social Security number listed, and $0.00 entered in Box 1, the other form should have the
Corrected
box unmarked and the correct Social Security number and distribution amount listed

Question 15

John Wayne, age 39, took a distribution from his Roth IRA on January 30, 2023. What distribution code is used to report John’s distribution?

Answer 15

Code J

Question 16

Fred Brown, age 42, is the beneficiary of his Uncle Ben’s Traditional IRA. Uncle Ben died July 14, 2023, at age 67. On October18, 2023, Fred took a total distribution from the IRA equaling$5,150. Fred grew concerned in April 2024 when he didn’t get a form reporting the distribution that he had received from his uncle’s IRA. On April 10, 2024, Fred went to Breezy Pines Financial,the custodian of the IRA, and questioned why he hadn’t received atax form. After reviewing the file, Breezy Pines Financial discovered that it had inadvertently reported the distribution under Uncle Ben’s name and Social Security number, with IRA distribution code 7.How should the distribution have been reported?

Answer 16

The distribution needs to be changed to report under Fred’s name and Social Security number, with distribution code 4.

Question 17

What is the penalty for failing to provide a 2023 Form 5498 to theIRS

Answer 17

$50 per failure

Question 18

What is the penalty for failing to timely file a 2023 Form 1099-R with the IRS ?
a. $50 per failure
b. Corrected within 30 days: $60 per failure; $630,500 maximum; $220,500 small business maximum
c. Corrected after 30 days but before August 1: $120 per failure; $1,891,500 maximum; $630,500 smallbusiness maximum
d. Corrected after August 1: $310 per failure; $3,783,000 maximum; $1,261,000 small business maximum

Answer 18

b. Corrected within 30 days: $60 per failure; $630,500 maximum; $220,500 small business maximum
c. Corrected after 30 days but before August 1: $120 per failure; $1,891,500 maximum; $630,500 smallbusiness maximum
d. Corrected after August 1: $310 per failure; $3,783,000 maximum; $1,261,000 small business maximum

Question 19

What is the penalty for failing to provide a 2023 Form 1099-R to IRA owners
a. $50 per failure
b. Corrected within 30 days: $60 per failure; $630,500 maximum; $220,500 small business maximum
c. Corrected after 30 days but before August 1: $120 per failure; $1,891,500 maximum; $630,500 smallbusiness maximum
d. Corrected after August 1: $310 per failure; $3,783,000 maximum; $1,261,000 small business maximum

Answer 19

b. Corrected within 30 days: $60 per failure; $630,500 maximum; $220,500 small business maximum
c. Corrected after 30 days but before August 1: $120 per failure; $1,891,500 maximum; $630,500 smallbusiness maximum
d. Corrected after August 1: $310 per failure; $3,783,000 maximum; $1,261,000 small business maximum

Question 20

What is the penalty for failure to provide a 2023 account statement to IRA owners

Answer 20

$50 per failure

Question 21

What is the penalty for failure to provide a 2023 fair market value statement to IRA owners

Answer 21

$50 per failure

Question 22

On July 11, 2024, Judy Spring, age 52, established a new Roth IRA at Life Savings Financial with a $5,000 contribution. On July 16,2024, Judy went back to Life Savings Financial and requested that her IRA be revoked. No earnings had accrued in her IRA. What amount should be reported in Box 2a?

Answer 22

$0.00

Question 23

On July 11, 2024, Judy Spring, age 52, established a new Roth IRA at Life Savings Financial with a $5,000 contribution. On July 16,2024, Judy went back to Life Savings Financial and requested that her IRA be revoked. No earnings had accrued in her IRA. What code should be listed in Box 7?

Answer 23

Code J

Question 24

On July 11, 2024, Judy Spring, age 52, established a new Roth IRA at Life Savings Financial with a $5,000 contribution. On July 16,2024, Judy went back to Life Savings Financial and requested that her IRA be revoked. No earnings had accrued in her IRA. Will Judy receive a Form 5498 for 2024 reporting this contribution?

Answer 24

Yes

Question 25

On August 12, 2023, Justine, age 39, requested a distribution of$28,500 from her Traditional IRA at ABC Bank. She also elected to have 10 percent withheld for federal income taxes. She deposited the money into her checking account. On September 10, 2023, she entered Up North Financial to establish a new Traditional IRA with a rollover contribution of $28,500 (Justine made up the withheld amount out of pocket). The balance of her new Traditional IRA on December 31, 2023, was $30,200. What amount should be reported in Box 2a?

Answer 25

$28,500

Question 26

On August 12, 2023, Justine, age 39, requested a distribution of$28,500 from her Traditional IRA at ABC Bank. She also elected to have 10 percent withheld for federal income taxes. She deposited the money into her checking account. On September 10, 2023, she entered Up North Financial to establish a new Traditional IRA with a rollover contribution of $28,500 (Justine made up the withheld amount out of pocket). The balance of her new Traditional IRA on December 31, 2023, was $30,200. What amount should be reported in Box 4?

Answer 26

$2,850

Question 27

On August 12, 2023, Justine, age 39, requested a distribution of$28,500 from her Traditional IRA at ABC Bank. She also elected to have 10 percent withheld for federal income taxes. She deposited the money into her checking account. On September 10, 2023, she entered Up North Financial to establish a new Traditional IRA with a rollover contribution of $28,500 (Justine made up the withheld amount out of pocket). The balance of her new Traditional IRA on December 31, 2023, was $30,200. What amount should be reported in Box 7?

Answer 27

Code 1

Question 28

On August 12, 2023, Justine, age 39, requested a distribution of$28,500 from her Traditional IRA at ABC Bank. She also elected to have 10 percent withheld for federal income taxes. She deposited the money into her checking account. On September 10, 2023, she entered Up North Financial to establish a new Traditional IRA with a rollover contribution of $28,500 (Justine made up the withheld amount out of pocket). The balance of her new Traditional IRA on December 31, 2023, was $30,200.
a. Plan agreement
b. Disclosure statement
c. Financial disclosure
d. Rollover Certification Form
e. All of the above

Answer 28

e. All of the above