1099-Rs not filed

[Cynchbeast]

We have a client with DB and PS plans. His father (already at RMD age) has accumulated a lot of money in the plan over the years, and we only yesterday found out that in 2007 and 2008 he took out a total of over $530,000 dollars and rolled it over to an IRA.

Since we were never told of the distributions, there were, of course, no 1099-Rs preparerd. At this point, both 2007 and 2008 are late. But since all three distributions were rollovers and therefore not taxable events, we felt the best course of action might be no course of action.

What are people's thoughts on not preparing 1099-Rs for IRA rollovers???

[jpod]

they should be filed

[Guest Sieve]

I don't know who "we" are, since the one generally responsible for preparing the Form 1099-R is the custodian making the distribution. And, if you prepared the Form 5500 then you would know that distribtuions were made. So, you apparently are not a custodian or a TPA or a recordkeeper. Are you really responsible for the 1099-R? Are you sure someone else hasn't already prepared it?

[Appleby]

The custodian usually files the 1099-R if they are also the prototype sponsor and the plan-sponsor delegates the responsibility of filing to them.

I can see how Cynch’s scenario could occur in a case where the Employer establishes a QP with a custodian, where the custodian is not the prototype sponsor. So, except for ensuring that earnings are not reported as income (the account flagged as one not-subject to withholding on income/earnings), the custodian assumes no retirement-plans related responsibility. In such cases, the TPA should be on record to receive notification of activity that occurs in the account so that proper records can be maintained; if such provisions are not made, the TPA is not made aware of any activity unless they receive the information from the employer.

Unfortunately, this scenario occurs often…