Roll over of IRA

[Chief]

A clientI went to a local bank and requested a rollover of an IRA held by Vanguard. Vanguard then electronically transferred the funds to the Bank and mailed a check to the client for the RMD. They said because the transaction was handled directly by the two financial institutions that a 1099 will not be issued. Is this a correct way to handle the rollover?.

[Snaggletooth]

Yes and No

Chief, yes and no. How's that for a straight answer?

I believe if Vanguard mailed a check to taxpayer for MRD, they are obligated to issue a 1099-R for this amount.

As to the amount "rolled over" to the bank, I'm not aware of any obligation to issue a 1099 but over the course of every tax season I see dozens of 1099s with a rollover code. Thus I believe Vanguard can issue such a 1099-R, but not sure whether they are required to do so.

[Joe Btfsplk]

Stories change with the retelling

A clientI went to a local bank and requested a rollover of an IRA held by Vanguard. Vanguard then electronically transferred the funds to the Bank and mailed a check to the client for the RMD. They said because the transaction was handled directly by the two financial institutions that a 1099 will not be issued. Is this a correct way to handle the rollover?.

The check with the RMD would require a1099-R with a code and would be taxable.. The direct transfer would require a 1099-R with a code G but would not be taxable..

What the client probably meant was that the direct transfer would not be a taxable withdrawal. Things tend to get changed when one person tells another and the second person restates it in his own words and a third person gets a whole 'nother version of what it started as.