(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.