Bank screwed up IRA - any recourse?

Learn from the experience that your procrastination doesn't necessarily create a sense of emergency in others. You might want to get things together a little faster for 2008.

There's nothing you can do about making a 2007 traditional IRA contribution at this point.

Thanks. I know there's nothing we can do about an IRA. My question is, what can we do against the bank? Wasn't it a breach of promise on their part? We have suffered damage and inconvenience as a consequence of their negligence.

Is that $850 for federal tax on the $5000? If you file an amended return as early as possible, interest on money you owe will be as small as possible. It's strange that they looked at the postmark on the envelope.

Maybe you can sue. But at least you have an early start for tax year

2008 :).

That's a lawyer question, not a tax one.

I'd say you're chances are slim and none and Slim just left town for anything other than the apology you apparently already received. Maybe you could cry on the branch manager's shoulder and get a $25 bond or something but I see no way they're going to make up the purported loss. Only way I'd see even a glimmer of a small claims court winning would be if you had a written promise they would ensure they took it to the PO and see that it was deposited in a box marked for that day postmark. Making a verbal statement of that sort stand up just ain't agonna' happen imo.

$0.02, ymmv, etc., etc., etc., ...

You might have to settle for writing a letter to the highest ranking bank officer you can identify, explaining why you are closing your account and moving it to another bank. Give them a week to respond before doing so.

My take is that the consultant is an agent for Alliance Berstein and so when you wrote the check you effectively mailed it and it is good.

That argument is going to get you no where unless one of you shows up at the bank and gets the contribution remailed with a letter of explanation from a officer of the bank.

Even then it may not fly. But it is worth the effort.

Dick

Actually, the bank may owe you a lot more, depending upon your age. Your 2007 contribution would have grown tax free for x number of years. You may have had an oral contract with your bank. If so, you definitely have recourse against the bank, but you made need a lawyer to assert your claim, and not many lawyers will take such a small case. Try sending a letter to the banks legal department, explaining that you relied upon your consultant's representation, and that you could have mailed the check yourself. By the way, this should not be considered legal advice. Check with your local bar association.

Thank you all for your replies. We'll be going to the bank Monday and see what they say. If all fails, should we file an amended return to cancel the IRA deduction? Or will the IRS pick it up automatically and deduct it themselves? We won't be owing a balance, our refund will be smaller.

Yes, but wait until your original return is processed (timing depends on whether you e-filed or not).

Eventually, but you will probably get the refund first, then many months later a letter stating you owe some of it back plus interest.

-Mark Bole

"Bob G" wrote

Something that might make this moot: How much were you planning to put in for tax year 2008? You say you were trying to contribute $5k for you and your wife for 2007. It's possible you and your wife are eligible to contribute $10k for 2008. See

for starters.

If you have not already, I recommend getting documentation of the bank consultant's apology. Record him on the phone; get an email from him; whatever it takes. It is an admission of wrongdoing. Not that it would help legally (though it might). More that it could help in general when you plead your case to the consultant's boss.

Consider the words at

"Similar to your tax return, a postmark date is considered timely; therefore, if you send your contribution in the mail by April 15, you will have met the deadline, even if your financial institution receives the contribution after April 15."

Granted this is not the IRS talking, but I suspect it is based on IRS verbage or cases. If a postmark is considered timely, then it seems to me the evidence you have (witnesses saw you at the bank; the consultant says he received the check on Apr. 15; etc.) would also support an argument of timeliness.

I keep in mind that the government /wants/ people to save in their IRAs. It's not like there is a government policy of wanting to nail IRA contributors with obvious (and documented) good intentions.

Only if, as you say, all fails. I'd keep probing for the best answer. I am not sure we're there yet.

I imagine asking Alliance Bernstein to backdate when it was the local bank's fault is a stretch. But I wonder if it is legal for the local bank to which you originally went holds IRAs and it might backdate a deposit into one for you. Probably not, but do get this answered.

for one indicates they will eventually pick up on it.

Effectively DELIVERED it. Wasn't it handed to the agent?

I agree wth this approach. However, what are the facts:

1) Who is the custodian? The bank or Alliance Bernstein. 2) Is the bank an agent for Alliance Bernstein?

If the answers are to the first question, the bank, or the second question, yes, then it looks to me like you did satisfy all the necessary requirements.

Thanks for all your responses.

My wife has clarified the entire sequence of events and I expect it may make a difference in your advice.

She had an existing IRA with Alliance-Bernstein (AB). On April 15 she called their number, obtained from a regular account status statement recently received in the mail, and told them she wanted to contribute another $5,000 for tax purposes. They told her to get in touch with one of their representatives, a Mr. KJ, whose name was listed as ?Advisor? on the same AB account statement, and who works for the Bank of Oklahoma (we live in Oklahoma City).

She called this gentleman and he told her to go to the nearest branch office. There she dealt with a young man, who wanted to confirm everything and called KJ on the spot. KJ was not available and he was referred to his assistant, Ms EM, also a Bank of Oklahoma employee.

Ms EM said everything was in order, to accept my wife?s check for $5,000 and to ?inter-office? it to her. My wife then wrote a check for $5,000 dated on that date, April 15, and left it with the young man.

A few days later we got the check back from AB with a note that it had been received past the April 15 deadline, sorry. We called AB and they said nothing could be done. We then called KJ at the Bank of Oklahoma and again were referred to his assistant, Ms EM. She said that the check wasn?t mailed until the next day because ?all these companies give a few days? leeway?. There was nothing she could do, sorry.

That?s where it stands. We?re going to the bank tomorrow morning and see what can be done. We?re incurring additional taxes of $1,250, which includes federal and Oklahoma state taxes.

My opinion is that the check was accepted on the 15th of April by an authorized representative of AB and therefore it qualifies for a tax deduction. The fact that Mrs EM, acting as the assistant of the person who appears on the AB statement as AB?s ?Advisor?, accepted the check on the 15th, constitutes actual and legal acceptance of the IRA contribution on that date.

I would appreciate your comments. Thanks.

All's well that ends well! The Bank of Oklahoma acknowledged it was at fault and found another company that accepted our April 15 check and started an IRA for us. Alliance-Bernstein remained intransigent, even though the bank tried to reason with them. Thanks all for your help!

"Bob G" wrote

Wow, interesting! Good for you for following up on all this. I bet your posts here are going to help someone else in the future.

Start by naming the bank, to protect other people.

The more painful it is for them not to do the right thing, the more likely they are to do the right thing.

Seth