CU*Answers, a CUSO known for providing its flagship core processing system, CU*BASE, has recently announced a software enhancement to comply with IRA distribution regulations.
IRS regulations state that when an IRA distribution is paid out to a beneficiary, the 1099-R form needs to be reported under the beneficiary’s SSN or TIN, not the IRA holders SSN or TIN. To facilitate this, a new IRA Beneficiary Distributions file will act as a supplement to the IRA Beneficiary File, allowing credit unions to record a total distribution amount for each beneficiary, including the reporting year. Additionally, the screen used to add and maintain information about IRA beneficiaries has been improved.
After a member dies, the credit union will have to post withdrawal transactions as usual, coding them with the IRA posting code for death distribution, and the IRA program coordinator will need to use a new command key on the IRA Beneficiaries maintenance screen to record individual beneficiary distribution records showing which beneficiary actually received the money.
The CUSO does point out that this is not an automated process, it will need to be added to the credit unions to-do list; otherwise all of the distributions would be reported under the members SSN/TIN like now.