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Author: CarHasAnts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121351  
Subject: Re: Multiple rollover problems and 1099-R Date: 3/25/2008 12:17 AM
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Hi Phil,

Thanks for reading and bearing with me, I tried to be more specific below. I can quickly post clarifications if I know them. If I don't, I'll have to try to get "Carl" to fax me the paperwork. It's just really painful to see something bad happen to a family member's savings.


Timeline
---------------
2000 or earlier
Carl opens a IRA and a Roth IRA at DaisyInsurance, which is an annuity product, and contributes the IRS maximum each year, he does not exceed the maximum as a combination.

2007 -
1. The total balance of the IRA + Roth IRA is $30,000 now at DaisyInsurance.
2. Carl signs papers to move IRA + Roth from DaisyInsurance to BoringBank IRA + Roth (same into the same).
3. Carl is issued 2 checks from DaisyInsurance, one for the IRA, one for the Roth.
4. Carl brings the checks to BoringBank, and signs more papers. At this point, Carl assumes that the IRA + Roth was moved from DaisyInsurance to BoringBank. Carl has no concept of "distribution". I am trying to find out the exact papers that were signed during this transaction ( or multiple transactions). This is all done within the 60-day time limit.

2008 January -
2 1099-Rs are issued from DaisyInsurance, 1 for the Roth, 1 for the Traditional IRA
2 1099-Rs are issued from BoringBank, 1 for the Roth, 1 for the Traditional IRA


Answers to questions
--------------------
> What does "all the assets" mean? Where were these assets before? Were they all in IRA accounts?

The 30k were IRA + Roth IRAs, accumulated over the yearly contributions.

>Is the ExtremeTradingAccount an IRA?

It is a relationship account consisting of a IRA and a Roth IRA.

> If so, who's the custodian, the bank or the insurance company?

The custodian changed from the insurance company to the bank.

> What happened to the assets moved into the account?

They are now invested in mutual funds recommended by the bank.

>For what?

Carl wanted to avoid fees, the new account at BoringBank seemed like a good idea. Plus, Carl was heard everywhere about the stock market skyrocketing so he wanted to get in on the action.


Retold Story **new text**
----------------
A few years ago, a financial services employee (Amy) from the local bank (BoringBank) told a family member (Carl) about annuities available from an affiliated insurance company (DaisyInsurance). It would be opened in as an IRA and or Roth IRAs. So I assume that Amy is a reseller, that might get some commission from the transaction (this is unknown). **Over the few years, Carl contributes the yearly maximum to either the IRA or the Roth IRA, and the total amounts of the IRA + Roth IRA is $30,000. The custodian is Daisy Insurance.**

Last year, Amy told Carl about a new type of **RELATIONSHIP** account available at BoringBank. As a result, Carl decides that it is a good idea to move ** The IRA + Roth IRA from DaisyInsurance ** to BoringBank's new account (ExtremeTradingAccount). ** This relationship status is a combination of IRAs and Roth IRAs accounts at BoringBank, which helps Carl avoid fees.**

Amy helps Carl sign papers for the move. This is good for Carl because he is 53 and getting a little bit bewildered by the whole financial services world. Everything seems to go fine, except that for some reason, DaisyInsurance issues Carl **2 checks totaling $30,000"**. Carl brings the check to BoringBank, and Amy and her boss said that this is unexpected, but ok. The ExtremeTradingAccount is opened and funded within 60 days and everyone is happy.

Fast forward to last week, Carl asks me about what to do with his 1099-Rs. DaisyInsurance issued 1099-Rs for the distribution. However, BoringBank also issued 1099-Rs for the same amount of money later, because it sat in a money market account temporarily before it was transfered to the ExtremeTradingAccount. Each 1099-R was issued with a Box 7 code of either '1' or 'J'. The taxable amount under Box 2 was greater than 0 in most cases, but not the full amount.
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