1099-R help please!

[nwtaxlady]

Lion...

Start with IRS Pub. 575

Yes, I read it and the part about Distributions of Employer Securities.
I am still unsure of how to treat my clients situation. Here's a recap with detailed info.

Client worked at Lowe's and left. He took his 401K and rolled it ALL over directly to Wells Fargo IRA. Never touched it.
A few months later the client took the money out of the IRA (early distribution).

Client has:

1099-R from Lowe's with
Box 1. 41768
Box 2. 20433
Box 6. 21335
Box 7. Code 1

1099-R from Wells Fargo IRA
Box 1. 41646
Box 2. 41646
Box 7. Code 1

Client has statements from Wells Fargo showing the rollover.
Also statement when he took the distribution from the IRA and that statement shows Lowe's stock sale of 531 shares.
Also has a form 5498 from Wells Fargo with the Rollover Contributions of $41418.

So how is his situation handled?

Thanks for your help!

[DonB]

The client Left Lowes. And he rolled over his 401K to Wells Fargo IRA and then he took a distribution out of the IRA. I got the statements from Wells Fargo and it was stock that had rolled over to Wells Fargo. Then the stock was sold for his distribution. I have Wells Fargo Statements showing it as a direct rollover. Taxpayer never touched it.

The Lowe's 1099-R has
Box 1. $41,768
Box 2. $20,433
Box 6. $21,335
Box 7. code 1

The Wells Fargo 1099-R has
Box 1. $41,646
Box 2. $41,646
Box 7. Code 1

From IRS:
If the lump-sum distribution includes employer securities and the payer reported an amount in box 6 of your Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., for net unrealized appreciation (NUA) in employer securities, the NUA is generally not subject to tax until you sell the securities. However, you may elect to include the NUA in your income in the year the securities are distributed to you.

The Lowe's 1099-R is reporting the distribution as one going to a taxable account. IMO wrong. WF issueing a 1099-R gives me confidence in your assertion that the transfer was to an IRA.

[Burke]

Do you think treat the Lowe's 1099-R as all rolled over and then his early distribution as normal from the Wells Fargo IRA?
He never received a 1099-B or anything. Your help is appreciated!! Please.

1. Yes, and attach Form 8275.
2. He would not have gotten a 1099-B. He would have gotten a 1099-R from Wells Fargo on the distribution, which you said he did. If he is under 59 1/2, penalty is imposed.

[DonB]

Continuing on-- If it were me, I would file the 8275, report the 1099-R in the appropriate place and make the correction adjustment on 1040 line 21. But how to back out the early distribution 10% tax??

[DonB]

Look at my last post... my question is how to report it.

From http://blog.credit.com/2014/02/wrong...-taxes-76934/:

This addresses 1099-Cs but should also apply to a 1099-R

The first thing you must do if you receive one of these forms and you believe it’s wrong is dispute it with the creditor that issued it. Otherwise, the IRS (which receives a copy of it as well) will assume the amount listed on the form is correct. Write to the company and be very specific about why you believe it is incorrect. Ask the company to either withdraw it or to issue a corrected version, and give them a specific, reasonable deadline for doing so. Send your letter by certified mail with proof of delivery, and keep a copy for your records.

If the company does not respond, or does not cooperate, you will need to let the IRS know about your dispute. You do this by including IRS Form 8275, Disclosure Statement, with your tax return. On this little-known form, you will give the IRS a detailed explanation of why you believe the 1099-C you received is incorrect and why you do not believe you should have to include some or all of that income on your tax return. Explain that you tried to correct it with the issuer, and include a copy of that dispute along with proof of delivery so the IRS knows that you tried.

[nwtaxlady]

Here is more detailed information.

Don't forget to deal with the NUA...

The client Left Lowes. And he rolled over his 401K to Wells Fargo IRA and then he took a distribution out of the IRA. I got the statements from Wells Fargo and it was stock that had rolled over to Wells Fargo. Then the stock was sold for his distribution. I have Wells Fargo Statements showing it as a direct rollover. Taxpayer never touched it.

The Lowe's 1099-R has
Box 1. $41,768
Box 2. $20,433
Box 6. $21,335
Box 7. code 1

The Wells Fargo 1099-R has
Box 1. $41,646
Box 2. $41,646
Box 7. Code 1

So this is not your ordinary case since he rolled it over first.
How would this be reported? Remember, the stock was sold while it was at Wells Fargo.

Do you think treat the Lowe's 1099-R as all rolled over and then his early distribution as normal from the Wells Fargo IRA?
He never received a 1099-B or anything.

Your help is appreciated!! Please.

[Twin Turbo Z]

I usually ask for a confirmation document from the receiving institution in these cases to remove all doubt. They would have gotten one at time of transfer -- if not, it should show up on the 5498 at year end. I have had cases where TP said it was rolled over; well, it was transferred but not into a qualified account. You never can be sure unless you can get proof.

Burke has the answer. Get documentation, explain what happened in a letter, attach the documents to the return (via pdf if efiled) or mail it in.

[nwtaxlady]

Help please!!

Look at my last post... my question is how to report it.

[TAXNJ]

Now that....

The Stock got rolled over to an IRA at Wells Fargo. Then, he took a distribution from that IRA.

The 1099-R from the Company he worked for Lowe's 401K 1099-R Has:
Box 1 $41,768
Box 2 $20,433
Box 6 $21,335 (net unrealized appreciation in employer's securities)

This was all ROLLED OVER to Wells Fargo IRA

A month later taxpayer took a distribution.
The 1099-R from Wells Fargo has:
Box 1 $41,646
Box 2 $41,646

and some Federal taxes withheld.

I asked for the monthly statement from Wells Fargo for when it was rolled over and it says 531 shares deposited with no dollar amount.
Then a week after that he took a distribution.

Please help! What needs to be done?

you have the information what was the result after entering both 1099-Rs ?

[nwtaxlady]

More detailed information

The Stock got rolled over to an IRA at Wells Fargo. Then, he took a distribution from that IRA.

The 1099-R from the Company he worked for Lowe's 401K 1099-R Has:
Box 1 $41,768
Box 2 $20,433
Box 6 $21,335 (net unrealized appreciation in employer's securities)

This was all ROLLED OVER to Wells Fargo IRA

A month later taxpayer took a distribution.
The 1099-R from Wells Fargo has:
Box 1 $41,646
Box 2 $41,646

and some Federal taxes withheld.

I asked for the monthly statement from Wells Fargo for when it was rolled over and it says 531 shares deposited with no dollar amount.
Then a week after that he took a distribution.

Please help! What needs to be done?

[John of PA]

We are seeing more and more errors like this on 1099-R coding. I just had a client with a 600,000 rollover coded 4 when it should have been G. There are 2 choices. 1) Have the finaancial institution correct the 1099-R. 2) Deal with IRS when they contact the taxpayer and for this option you will need a copy of the IRA statement showoing the Rollover going into the IRA account on the monthly statement for the month of the rollover. I just had a client change their account (large accounts) to Vanguard from a well known financial institution for this reason.

[Burke]

yes, I said he rolled it ALL over to an IRA, it was a direct transfer and didn't touch the funds.

I usually ask for a confirmation document from the receiving institution in these cases to remove all doubt. They would have gotten one at time of transfer -- if not, it should show up on the 5498 at year end. I have had cases where TP said it was rolled over; well, it was transferred but not into a qualified account. You never can be sure unless you can get proof.

[Lion]

Start with IRS Pub. 575

[nwtaxlady]

Don't forget to deal with the NUA...

That's what I was wondering. Do I have to do anything with the NUA or since they never saw the money and it went directly to a Wells Fargo IRA then put it was rolled over. They rolled it over to an IRA direct transfer.
So now what?

[Lion]

Don't forget to deal with the NUA...