Incorrect IRA Distribution on 1099R

[LadyDi62]

My client rolled over $13,818 from his 401K account into an IRA account.  Then he withdrew the $13,818 from the IRA to be used for a first time home purchase.

When he received his 1099 R for the distribution it said that he received $25,572 with 2,072 withheld for tax.  When he contacted Fidelity to let them know they made a mistake on the 1099 R and requested a corrected 1099 R, Fidelity told him to tell his tax person to use the 5498 they sent him.  On the 5498 it states that $25,550 was a rollover contribution.

How do I handle this since Fidelity will not issue my client a corrected 1099R.

[BobKamman]

You're sure it's his name on the 1099R?

Was the 401k account at Fidelity, also?

Do you have any idea of where the $25,572 amount comes from?  Was there perhaps another distribution from the IRA that he needs help to remember?  Does he have a year-end statement, or quarterly statements that show all the IRA transactions?  It sort of looks like he withdrew another net $10,000 after 20% withholding, although the numbers don't quite match up.  The $10,000 is the maximum he can exclude from the 10% penalty, for the home purchase.  

Have you listened in on the phone calls to Fidelity?  (They're probably saying, "sorry, we can't help, we're in the middle of a financial crisis")  Still, sometimes clients get confused when they try to relay messages.

I would have the client call Fidelity from my office, and give them permission to speak with me.  If the first agent could not answer our questions, I would ask to speak with a supervisor.  If the supervisor was not helpful, I would ask to verify his full name and title for purposes of the FINRA complaint.  

[Just-Lisa-Now- · Accepted solution]

He should have 2 1099Rs one for the 401K that was rolled, and then one for the IRA that was distributed.

 Have them bring in all the statements showing the money moving from each account to the other.  Sounds like it may not have gone down the way your client thinks it did.

[LadyDi62]

Thank you for your reply.  My client and I will be speaking with Fidelity today regarding this issue then I will know the full story.  

The bottom line is that the client never had $25K.  He presented to me a 1099-R showing "gross distribution" box 1 of $13K with box 7 "distribution code "G" which was rolled over into the Fidelity IRA account in 2019.  This was the only transaction he had with Fidelity Investments regarding an IRA.

Fidelity Investments issued him a 1099-R showing "gross distribution" box 1 of $25K and box 2a "taxable amount" $25K with some federal income tax withheld in box 4 and box 7 "distribution code" 1 [IRA/SEP Simple] X, so here's the problem.  To top everything else off on another statement from Fidelity "Form 5498" it states that they reported $25K to IRS.

My client is going to show me his bank statements today showing where Fidelity wired him 11K as his withdrawal for him to put down on the purchase of a new home (first time home buyer).

[LadyDi62]

Thank your for your reply.  I am meeting with my client today.