Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Hi all,

I am new to this board and I'm looking for some help. Yes my car has ants. I'm going to tell the story below, and if anyone has any accountant, legal, or just advice, it would be greatly appreciated. This is all that I know so far, but it seems like a messy situation right now.

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).

Last year, Amy told Carl about a new type of account available at BoringBank. As a result, Carl decides that it is a good idea to move all the assets to BoringBank's new account (ExtremeTradingAccount). 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 a check for $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.

1. Does this mean that a rollover twice?
1a. This is not allowed under Pub 590 P.24?

2. Will the second amount be treated as an over contribution exceeding yearly limits?
2a. In addition, if the second distribution is treated as such, will Carl need to pay income + penalty taxes?

3. How can Carl fix this problem? (sorry, this is complex)

4. Is it stupid that BoringBank did not do a Trustee to Trustee rollver / transfer?

5. Since BoringBank provided the paperwork to perform this transaction, if there are these additional taxes involved, does Carl have any legal recourse to recover these taxes from BoringBank?

Thanks for any comments or advice,
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.