Transfer mistake

[Guest john2]

A few months a go I transfered my assests from a 1998 Roth IRA conversion from a mutual fund company to my brokrage account with TD Waterhouse (I did this to aviod the fees Waterhouse charges) I did not realize at the time it was put into a non-retirement account. Thus it was treated as a withdraw from my Roth-IRA account and I will have to pay the penalities. I had no intentions on having this happen I feel TD waterhouse should of ask me if I wanted this transfer into an Roth IRA account (which I didn't have one with them). The fund company that I transfered from said they would have ask. Waterhouse is working on the problem so I still hope they can undo it some how. Does anybody have any ideas on this predicament I'm in Thank-you

[Guest Donnabr22]

I have not seen any official documentation that addresses such an issue. However, I have seen many instances of this occurring.

It appears the basis for your recourse would be SEC rules – not IRS regulations.

Generally, the receiving firm, upon receiving a request to transfer assets to one of their accounts, is required to perform some type of validation, to ensure that the transfer is occurring between identical types to retirement plans or IRAs. Most delivering firms will not release the transfer unless they receive some confirmation form the receiving… some responsibility may be attributable to the delivering firm, as they too may have neglected to do their due diligence by ensuring that the assets were being transferred to an IRA. You will need to look at a few things.

1. Did the paperwork you complete request a ‘transfer’ or a distribution?

2. Did the delivering firm obtain validation from TD Waterhouse that the assets were being transferred to a Roth IRA? If so, then TD Waterhouse is responsible and must help you to have those assets moved to a Roth IRA and make any necessary tax reporting adjustment on their side. If a 1099-R was issued by the delivering firm, they should issue a 5498 to offset then transaction. If not, then the delivering firm is responsible and must reclaim the assets from TD Waterhouse and perform any necessary tax reporting adjustments

3. Did TD Waterhouse obtain validation of the type of account from which the assets were being delivered? If yes, then they are responsible to ensure that the proper type of account is credited. If not, then they still have some degree of responsibility and must work with you to get this adjusted

[John G]

Donnabr22:

Your question is a great example for other readers of this board. If you write a letter requesting action, or make a contribution deposit - - you MUST verify the results. Some mistakes can be corrected or will be forgiven, but avoid all those hassles by putting a post it on your monitor or journal entry two weeks ahead in your daytimer (preferably both) to double check that everything was done correctly.

On this site, we have had reports of conversions that never got done, moneys put into the wrong account, accountants that forgot to include relevant tax data in filings, wires that did not show up, etc. You, the citizen, must take some responsibility for checking the work of others. It will save you time and hassles.

Been there, forgot to do it myself a few times.

[JAMES PATRICK]

My question would be " when you filled out the form to do the transfer did you give TD the account number of your regular taxable account ?"