2014 1099-R DistCode 7 w/IRA/SEP/SIMPLE checked?

A 2014 1099-R has been received that, as like in all past years, has Distribution Code 7 (Normal Distribution) but, unlike all past years, now has IRA/SEP/SIMPLE checked.

This is for a "traditional" fixed-amount/defined-benefit employee retirement annuity that commenced at age 65 in 2005. All 10099's received since then (save for this 2014 edition) have not had the IRA... box checked.

I have also received from the 1099 issuer (for the first time) a [typically] un-dated computer-generated "year-end fair market value in accordance with federal rules ..." letter advising me of some dollar amount and other boiler-plate.

Before I try to contact the issuer (with the likely prospect of reaching someone who doesn't know anything - let alone about this subject) does the fact that the 2014 1009-R now has the IRA/... box checked present a complication to me?

I recognize that the 1099 reported amounts remain fully taxable to me (both federal and state) but wonder whether the checked box is something I should now be concerned about? Should I waste my energy trying to get a 1009-R re-issued? Will I now be exposed to something that could be avoided?

Thank you for your insight. Geo. Salisbury Long Valley, NJ

Reply to
GSalisbury
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I really can't advise you whether to request correction, or to ignore the checkbox when filing the return.

(If you are filing on paper, may I suggest whiteout....)

If not corrected, you would be subject to minimum distribution requirements, without the ability to actually do anything about it. If you have other IRAs, this might help or hurt you, depending on whether the actual distribution is more or less than the minimum distribution recalculated from the stated value.

Reply to
Arthur Rubin

Thank you for your consideration. Frankly the "... you would be subject to without the ability to ..." part is what I was leery of because I anticipate difficulty discussing it with the issuer. Oh well, I guess I have to give it a try anyway. Now I'm having a brain freeze for a moment (6F in NJ) - 1099's do or don't get sent to IRS? Is there a matching process? I thought I knew but now I don't remember. Thanks. Geo. Salisbury Long Valley, NJ

Reply to
GSalisbury

By "without the ability to do anything about it", I mean that you have no control over the amount distributed; you cannot request that the distribution be increased to the amount of the MRD.

1099-Rs are reported to the IRS, and probably to the NJDoT; I've heard there is a matching program, but, with the IRS budget cuts, who knows? Some of the information is definitely matched when E-filing, but I've never had a mismatched checkmark that caused a "bounce" message.
Reply to
Arthur Rubin

[...]

This is a non-trivial change and I think you need to find out why. Is this a pension from a typical large corporation, such as one that is publicly traded?

The simplest explanation that fits the facts (other than an egregious error in issuing the 1099-R after nearly a decade of doing it right) is that the pension "cashed you out" and rolled over the net present value of your pension into an IRA. I've seen some corporations make optional offers to current employees to switch out of the plan in this fashion, but I'd be surprised if they could do it once you already started to receive your fixed benefit (unless the company is shutting down the entire plan for everyone).

As for the "un-dated computer-generated 'year-end fair market value in accordance with federal rules ...; letter ", was this a Form 5498? If so, that is more strong evidence that you truly are now switched to an IRA, which means you control it.

Are you sure you didn't receive any communications from the payer in the last year or two regarding this? You hint in both of your messages that you feel communication with them is a problem...

Reply to
Mark Bole

I pretty much understood that as it's a retirement annuity with a fixed amount that was set when the settlement was selected at age 65.

That's what I thought I remembered.

I've always and only ever paper filed. I'll have to put myself through "talking with the issuer" to see where it goes. Again, thank you for your consideration. Geo.

Reply to
GSalisbury

Yes, this employee retirement annuity is from a typical large corporation - a mid-sized, mainline NJ insurance company. Some time after I left the company it went through a sequence of mergers/consolidation/buyouts etc. etc. etc. and is [now] no longer active. The company was not active at the time (2005) my annuity commenced. I don't recall its trading status - I *think* it was a mutual company. No, the "letter" that was received was not marked as a Form 5498 per se in any way except [possibly?] for a " ... in accordance with federal rules for Individual Retirement Annuities. ..." expression. And, no, I'm *pretty* sure I never received any kind of earlier communication concerning a change in characteristics - I'm pretty good at noticing/appreciating these types of things.

At this point my concern about communication is in the realm of a healthy bit of [seasoned citizen] cynicism about how it might proceed. Your "This is a non-trivial change ..." comment fits with my initial "this doesn't feel right" impression so I'll have to pursue the matter.

I'll try to close the loop here if there's a resolution. Hopefully I won't have to come back because of more confusion. Thanks. Geo. Salisbury Long Valley, NJ

Reply to
GSalisbury

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