Strange 1099s

My wife and I received two 1099 forms from our bank for TY 2013 which we don't understand. One is for me and the other is for her.

My 1099 is the simpler case. In 2013 I had an IRA CD of approximately $41,000 which matured and I elected to transfer the full amount to an IRA Money Market account I had at the same bank (Wells Fargo). So on the day the CD matured, I went to the bank in person, filled out the requisite paperwork, and the money was properly transferred to my MM account. As far as I know, this was handled as a trustee to trustee transfer (since in this case the sending and receiving trustee was the same), and I never saw or took possession of the check. So why did I receive a 1099? Box 1 and 2a both contain the amount I transferred, box 2b is checked and the distribution code in box 7 is "7". Was this just a mistake by the bank and do I need to have it corrected (that is, un-issued)? Or should I just include this on my 1040 and make sure I show the taxable amount as zero?

My wife's case is a little more complicated. She also had an IRA CD mature (amount $33,928) at Wells, but in this case we took a distribution on the funds and deposited the money in a regular checking account at Wells. Roughly 45 days later (well within the 60-day limit), we rolled $22,000 of this money over to her IRA Money Market account, also at Wells. So the net amount of her distribution was $11,928. Later in the year, we took the full amount that was in her IRA Money Market account (which was slightly more than $22,000 due to a few dollars that had already been in the account) and did a trustee to trustee transfer to a different brokerage company (Merrill Lynch). The way we did this was to have the bank issue a check to her for the $22,000+ and issue it to Merrill Lynch FBO my wife's name. The next day we delivered this to Merrill Lynch and they opened a brokerage IRA account for her.

In my wife's case, I expected to see a 1099 in my wife's name from Wells for $11,928 which was the net amount we ended up receiving from the IRA accounts. Instead, she got a 1099 from the bank for $55,997.41, which apparently is the sum of the original $33,926 plus the $22,000 we ended up putting back into the first IRA. In other words, instead of subtracting $22,000 from $33,926, they seem to have added. As was the case on my 1099, the full amount was included in box 1 and 2a, box 2b was checked and box 7 had a "7". In this case, the total distribution box next to the amount in

2a was also checked, since my wife no longer has any IRA money at Wells.

My wife and I are both age 63, and all of the above transactions took place in tax year 2013.

Reply to
Rick
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That sounds like a mistake. The question is, what's the mistake? Did the CD proceeds really stay within an IRA umbrella? If so, the form never should have even been generated.

Or did the bank screw up and dump the CD proceeds into a non-IRA account? If so, you might be screwed as (presumably) way more than 60 days have gone by.

Distributions aren't netted. The full amount is shown, and you account for the "putting it back within the 60 day limit" by writing ROLLOVER next to Form 1040 line 15, showing all the distributions in line 15a and subtracting out the rolled-over-in-time distributions when computing the line 15b amount.

That also seems wrong. IIRC there is no reporting at all on trustee-to-trustee IRA asset transfers. And if it was reported (which I don't believe it should have) it should have been reported on a separate

1099-R with a code G.

So IMHO you should have gotten a single 1099-R for $33,928 with a code

  1. And you'd report ,928 in 1040 line 15a and ,928 in line 15b. And the ,000 wouldn't be reported anywhere.

I think the best way to deal with this is to try to get them to correct the 1099-R. If you try to work with the documents you received there will ultimately be a mismatch between your return and the 5498 that Merrill-Lynch will send to the IRS that will cause the IRS to ask why that $22,000 hasn't been reported as income.

Reply to
Rich Carreiro

After a lot of back-and-forth, I was able to convince Wells that the trustee-to-trustee transfer to Merrill should not have been included on the

1099. They agreed to issue a corrected 1099 in the amount of $33,938.
Reply to
Rick

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