Quote Originally Posted by Burke View Post
No. The full amount of the 401(k) account was shown in Box1; zero in Box 2; Code G in Box 7. I looked this company up (which is a 3rd party outfit) on Google and the reviews are not good. Mostly due to delays in receiving monies and fees charged. A quick calculation shows the net increase in tax is $12. I told the client not to bother with it until he heard something further, and remarkably, he agreed. He has already spent considerable time thrashing it out with this company. They of course insist they processed it correctly. The original company with which he was employed was sold, they terminated their plan, and apparently turned all accounts over to this independent outfit to handle the payouts.
Then you're just stuck with "the tax facts" versus "the Form 1099-R numbers".

The Form 5498 does seem to be correct, but I doubt if the IRS would even notice such a "discrepancy."

The potential difference in taxes is hardly worth the effort, although as a matter of principal I generally disdain "what difference does it make?" as an answer to a tax question. We won't even go into the "but I've done (something) that way for years and never had a problem" as a justification.

And then, you also have the scenario (I've had a handful) where the numbers for a Form 1099-R distribution with Code G were reported correctly on the tax return, the filed return clearly showed "ROLLOVER" per the rules, and at some point in the future the client gets a notice of taxes due on the full "distribution" even when a zero was displayed on page 1 of the Form 1040.

FE