custodians and rollovers

[Guest Dan Shea]

Has anyone else experienced a custodian that will not issue 1099 from IRA to reflect roll-over to 401(K) plan? I have a client who's employee signed up for an annuity with (please do not laugh) a 16 year surrender period. Employee may withdraw 10% per year so she has taken one and rolled it over to her employers plan (IRA rollovers accepted in doc), custodian issued 1099 as premature even tho they knew it was rollover and refuse to issue check to new plan. Now IRS wants around tax and penalty even tho it was rolled over 10 days etc. Anyone have any thoughts on this.

[Guest mjb]

I dont understand why there is a problem w/IRS if taxpayer properly filled out 1040. Taxpayer who rollovers a distribution completes the information required on the 1040 (line 16?) showing that X dollars were received and 0 dollars were included in income because of R/o. Fact that 1099 is issued from payee plan (IRA) for a distribution is not indicative of taxation if distribution was rolled over w/in 60 day and properly reported on 1040.

[Appleby]

Agreed…

By the way, did the plan provide the custodian with an acceptance letter ( letter signed by the plan trustee, confirming that the plan would treat the amount as a rollover contribution to the plan? Was the check made payable to the plan? Most custodians will not report an amount as a direct rollover, unless they received an acceptance letter----they definitely will not if the check was not made payable to the plan/FBO the participant.