What can I do if 1099-R was issued incorrectly for a tax free rollover? Also 10% of taxes were withheld. Mutual fund co. refuses to send to client a corrected 1099R

[abctax55 · Accepted solution]

Is there a F 5498 showing the transfer?

edit...except those don't really show up until May.

How about the actual transfer forms? 

Your client may be correct, but maybe not. Clients are often wrong; brokerages not so often.

[abctax55]

How was the entire distribution rolled over if there was withholding?

[ars]

the distribution was rolled over without the 10% withheld taxes

[dd4vols]

so the taxpayer timely rolled over the remaining 90% of the distribution after he received the funds?

[ars]

taxpayer did not roll it over.  It was an IRA transfer to another mutual fund.  Client did not have any checks written to her.

[ars]

It was an IRA to Simple IRA transfer by the mutual fund company

[dd4vols]

what is in Box 7?   I had a client just this year, tell me the same story, but i happened to know her NEW broker, and upon further review, she brought in a check to him.   Not saying that's the situation in your case. So I just put the taxable amount the same as the withholding amount, and then  went to the Misc Statement form and explained what transpired in reality... that the taxpayer had timely rolled over ALL the funds of the IRA except the income tax withheld.  and that is what happened, taxpayer got credit for the amount of W/H... which more than covered the income tax on that amount.

[abctax55]

:+1:

[taxiowa]

As long as you have proof that this was rolled over, go down to line B2 of 1099R worksheet 3/4 way down and enter the amount rolled over.  This would be the total less the tax withheld.  Because that is the only amount eligible for rollover.  And keep proof in your file in case questioned.  So taxpayer will end up with taxes paid in for no income reported except the amount of withheld taxes themselves.

[ars]

Would the amount of the taxes withheld included as income? As the withheld taxes were not rolled over

[taxiowa]

Yes they are income if you do as I pointed out that only the remainder is rolled over.  oh I see I said no income.  I will correct that last line above.

[ars]

thanks so much.  I looked at the form and method and feel comfortable with the solution