Fidelity categorically refuses to use Q for Roth distributions

(More of a tax thing, admittedly, but since some of you
may deal with your clients' tax stuff as well, I thought
this might be of interest here.)
(Background - my mother made a qualified Roth distribution
that Fidelity could unilaterally determine was qualified -- she
is over age 59.5 (and they have her DOB) and the Roth account
had been at Fidelity for more than 5 years, so they know the
five-year holding period is satisfied. Yet they coded
the 1099-R with a "T" instead of a "Q". I realize that's
not a huge deal since she has the backup she needs if the IRS
ever challenges the status of the distribution, but it's
still somewhat annoying.)
(This is Fidelity's response to my mother's question about this)
I do understand your point of view to use code "Q" on your Roth
IRA 1099-R.
The following is from the 2011 Instructions for Forms 1099-R and
5498:
Use Code Q for a distribution from a Roth IRA if you know that the
participant meets the 5-year holding period and:
* The participant has reached age 59 1/2,
* The participant died, or
*
The participant is disabled.
Note: If any other code, such as 8 or P, applies, use Code J.
Use Code T for a distribution from a Roth IRA if you do not know
if the 5-year holding period has been met but:
* The participant has reached age 59 1/2,
* The participant died, or
*
The participant is disabled.
Note: If any other code, such as 8 or P, applies, use Code J.
As you can see from above, the IRS Tax Reporting Guidelines do
offer financial institutions the flexibility to use Code Q or T
for Roth IRA distributions. Code Q puts the burden of proof on
financial institution to determine if the distribution is
qualified or not. Therefore, we have decided to use Code T for all
post age 59 1/2 Roth IRA distributions.
_There are no instances where we will issue a Roth IRA 1099-R with
a Code Q._
While I know that not all investors will necessarily agree with
our position, I do hope you understand why we choose this option.
Reply to
Rich Carreiro

Site Timeline Threads

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.