Fed Tax Wheld on stocks issuing dividends in a IRA acct?

[Taxadvisor VA]

This seems absurd. A qualified retirement plan (IRA) has Federal tax with-held on dividends issued on stocks in an IRA acct.
Has anybody seen this happen in 2013?
Is this a mistake?

Below is the response form the Financial advisor:

Please be advised that IB is unable to submit elections to the Depository on a per-client basis regardless of account type. As such, one dividend tax rate is applied and the withholding is passed through to the shareholders upon payment of the dividend.

Since your account is an IRA, you are entitled to a reduced tax rate in which you will need to reclaim the funds at the end of the year. You may contact a tax advisor on how to reclaim this withholding tax.

Let me know what you think?
Thanks,
Taxadvisor VA

[DaveO]

I think they need a new trustee for their IRA account.

[JohnH]

I agree. This creates many questions about the qualifications of the financial advisor and the trustee. I've never seen income tax withheld on dividends unless the owner failed to provide a valid ID number. It suggests that the trustee isn't doing their job and that the financial advisor doesn't have enough common sense to suggest that they move the money to a qualified trustee.

[Taxadvisor VA]

John H

I agree. This creates many questions about the qualifications of the financial advisor and the trustee. I've never seen income tax withheld on dividends unless the owner failed to provide a valid ID number. It suggests that the trustee isn't doing their job and that the financial advisor doesn't have enough common sense to suggest that they move the money to a qualified trustee.

My thoughts exactly.
Thanks for your response.
Best Regards,
Taxadvisor VA