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A friend has asked me for advice about the following situation. He has a Simple IRA with Schwab through an S-Corporation. The maximum contribution per year is $6000, which he had already contributed for 1999. Two months ago, Schwab accidentally transferred an *additional* $6000 (from nowhere) to the personal part of the account (leaving a negative $6000 balance in the company account). He invested that extra money in some stocks.

Schwab has now apparently corrected the company account and transferred the $6000 deficit to the personal account. So the personal account now shows a *negative* $6000 money market balance, plus some stocks. Unfortunately, in the investment process, the stocks purchased with the extra $6000 have lost a fair amount.

If he sells $6000 worth of stocks at this point to cover the deficit, is there a reasonable chance that none of this will get caught and cause future problems?

Up to now, he has not brought this to Schwab's attention, nor has Schwab contacted him about it. Also, he wonders whether he can wait a little bit before selling, in the hope that his stocks bounce back some in value.

Thanks for your help!

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