1099s that brokerage won't do

We're doing 1099Rs for some clients that have brokerage accounts and the brokerage firm will not prepare the 1099s.

(No surprise).

Should we be getting the name, address and TIN of the brokerage house, as they prepared the check and note them as the Payor on 1099R, or use the Trust ID number for the Plan and make the plan the Payor

I would use the EIN that was used to deposit the withholding.  It is my understanding the IRS computers will try to reconcile the deposits they got to the amounts listed as withheld on the 1099-Rs.  

To not have the 945, 1099-R and 1096 not all sync I think could cause letters from the IRS about their inability to reconcile the amounts later in the year.

I will warn you I am not an expert on the topic but that has been my understanding for years.   Anyone want to confirm or deny what I said would be great.

I would think that is the broker's EIN but if they made the trust deposit the withholding with its EIN I would give serious thought to using that EIN. 

What ESOP guy said.  Everything should be done under the plan name and id number; the brokerage firm writing the check(s) is irrelevant info.

Agree with the above, but the tax withholding would be my big concern as I don't recall brokerages doing that either. Their position is all of that is a function of the Plan Administrator and/or Trustee of which they are neither. But if they are withholding and remitting taxes to IRS then you need to find out what EIN they using and prepare 1099R's et al using the same otherwise you, the plan sponsor and participant recipients are in for future headaches trying to reconcile this with IRS.

I would agree, but, unusual as it may seem, this one particular case, the brokerage institution wrote out the checks to either an eligible rollover institution, or to transferred to an IRA rollover established by the brokerage institution.

Only one individual took a distribution and paid the 20%.

In this particular case, I believe the pay or would be Ameriprise, on all 1099s, with their address and EIN????

3 minutes ago, thepensionmaven said:

In this particular case, I believe the pay or would be Ameriprise, on all 1099s, with their address and EIN????

No.  NO.

If they had an account at XYZ Bank and wrote checks from the XYZ Bank account would you call XYZ Bank the payor?  I hope not.  That's all that is happening here; the brokerage firm wrote checks or transferred money under instructions of the trustee.  I don't find it unusual at all.

39 minutes ago, Bird said:

No.  NO.

If they had an account at XYZ Bank and wrote checks from the XYZ Bank account would you call XYZ Bank the payor?  I hope not.  That's all that is happening here; the brokerage firm wrote checks or transferred money under instructions of the trustee.  I don't find it unusual at all.

This.  The payor is the PLAN, not the brokerage firm. 

On 1/27/2021 at 2:07 PM, ESOP Guy said:

I would use the EIN that was used to deposit the withholding.  It is my understanding the IRS computers will try to reconcile the deposits they got to the amounts listed as withheld on the 1099-Rs.  

To not have the 945, 1099-R and 1096 not all sync I think could cause letters from the IRS about their inability to reconcile the amounts later in the year.

I will warn you I am not an expert on the topic but that has been my understanding for years.   Anyone want to confirm or deny what I said would be great.

I would think that is the broker's EIN but if they made the trust deposit the withholding with its EIN I would give serious thought to using that EIN. 

Yes, let me be clear with my statement above now in bold.   When I said it would be the broker's EIN it would only be true if the broker used its EIN to deposit the withholding and in effect held itself out as the paying agent for the plan.    There are banks and funds that do that.   As part of the service they will issue the check or ACH, they will withhold when needed and issue the 1099-R.   A number of our clients hire such paying agents.   In many cases in the ESOP world if the ESOP has a bank as a professional trustee that bank will issue the payment, withhold, and issue the 1099-R.   I believe you can hire Penchecks to do that.   I know you can hire Reliance Trust Company to be a paying agent.

However, the mere fact the check was written by the broker doesn't mean the are the paying agent.   Like the last two comments by Bird and RatherBeGolfing make clear. 

Sorry, if part of my comment above caused confusion.  

23 hours ago, RatherBeGolfing said:

This.  The payor is the PLAN, not the brokerage firm. 

I handled a plan that was invested with AXA.  AXA wrote the check directly to participant, gave

OK, but the investment firm, ie Ameriprise (not the brokerage firm that brought the account to Ameriprise) either opened up rollovers for those participants who rolled over, or withheld the 20% and paid to IRS.

The funds at no time went through the employer.

Different answer?  I think the client should determine if Ameriprise prepared the 1099s as it would be inconsistent to use plan's EIN for 2099s and Ameriprise for withholding.

14 minutes ago, thepensionmaven said:

OK, but the investment firm, ie Ameriprise (not the brokerage firm that brought the account to Ameriprise) either opened up rollovers for those participants who rolled over, or withheld the 20% and paid to IRS.

The funds at no time went through the employer.

Different answer?  I think the client should determine if Ameriprise prepared the 1099s as it would be inconsistent to use plan's EIN for 2099s and Ameriprise for withholding.

I do the withholding and deposits for most of my clients.  Those funds go to an omnibus account for my firm, and at no time do they go through the employer.  The taxes are paid to EFTPS by my firm as a reporting agent on behalf of the plan.  For IRS purposes, the plan made the deposit, not my firm.  In cases where you outsource the payment and reporting to a third party, you basically transferring the benefit to the third party for payment.  It comes from them, not from you (the plan).  

If Ameriprise paid benefits and deposited withheld taxes using its own name and EIN, they would do the 1099-R and 945.  If they did the deposit as a reporting agent (on behalf of the plan), the plan is still the payor.  There should be no situation where YOU issue a 1099 or 945 using in Ameriprise's name and EIN.  The client needs to find out what services they have engaged Ameriprise to perform, period.

5 hours ago, thepensionmaven said:

I handled a plan that was invested with AXA.  AXA wrote the check directly to participant, gave

I assume the rest of this was that "they prepared the 1099s."  Not surprising -AXA is an insurance company.  For whatever reason, insurance companies tend to do WH and reporting, even if not a fully self-directed plan.  Brokerage firms (generally) don't.  If they didn't submit the WH, and I seriously doubt it, then you have to.  You'll have to ask to be sure.  Which raises the question...was the withholding submitted to the IRS?

No offense, but if you don't know this, and don't know how to do it, maybe you should look to PenChecks or somebody like that to handle this going forward.

Thanks all.