Tax time!!! Oh no's?

[doneat54]

Quick question: In Feb 2014 I sold a mutual fund in my Fidelity Rollover IRA and let the proceeds sit there in cash. In Dec I liquidated everything into the account to cash and had Fidelity cut a check and send it to my Vanguard 401k. My wife is doing our taxes now and has a fidelity tax form that shows the Feb sell and seems to indicate that taxes are due on the gains.

I was under the impression that as long as I didn't remove funds from the account, that there was no tax liability. True? If so, does it need to be reported on our returns? Fidelity form seems (wife says, I haven't looked at it yet) that it was reported to the IRS.

TIA

 

[Walt34]

I was under the impression that as long as I didn't remove funds from the account, that there was no tax liability. True? If so, does it need to be reported on our returns? Fidelity form seems (wife says, I haven't looked at it yet) that it was reported to the IRS.

TIA

It does need to be reported but on the return but there is no tax liability. I about freaked when I received a 1099 from Fidelity because I rolled over a six-figure IRA to Vanguard.

Without going back into TurboTax, I think the lifesaver here is block 7 on the 1099 showing distribution code G. IIRC this means it is a rollover, not a distribution, so no tax is due.

 

[pb4uski]

I wouldn't think the Feb 2014 transaction would result in any reporting since you just liquidated a ticker in your IRA and the proceeds were available for investment.

The December transaction would be reported on 1099-R but the G coding on line 7 should reflect that it was rolled over. The end result should be the amount sent to Vanguard on line 16a of your 1040 and the word "ROLLOVER" and 0 on line 16b.

 

[ERD50]

Quick question: In Feb 2014 I sold a mutual fund in my Fidelity Rollover IRA and let the proceeds sit there in cash. In Dec I liquidated everything into the account to cash and had Fidelity cut a check and send it to my Vanguard 401k. My wife is doing our taxes now and has a fidelity tax form that shows the Feb sell and seems to indicate that taxes are due on the gains.
...

Double check this, but if you actually had Fidelity send you a check, you have 60 days to get it into another IRA, or it is a fully taxable distribution.

For future reference, and for others, I really would never have them send me a check. Too many ways for things to go wrong, and miss the 60 day window.

It is far easier to do the transfer on-line. All the big houses can initiate a 'pull' from the other financial institution, and you can track progress on-line, and the money isn't in limbo anywhere along the way, and it will happen in a few days

-ERD50.

 

[gauss]

Which code is shown in box 7 of your 1099-R from Fidelity?

-gauss

 

[kaneohe]

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The December transaction would be reported on 1099-R but the G coding on line 7 should reflect that it was rolled over. The end result should be the amount sent to Vanguard on line 16a of your 1040 and the word "ROLLOVER" and 0 on line 16b.

If the distribution is going from IRA to qualified plan, I wonder if the reporting
is done on the IRA line 15 or the qualified plan line 16?

 

[pb4uski]

If the distribution is going from IRA to qualified plan, I wonder if the reporting
is done on the IRA line 15 or the qualified plan line 16?

You are right, it would be line 15... I was thinking of a 401k rollover (which my son has for 2014 and ends up on line 16).

 

[jwkde]

#1 For the Feb transaction if you left the cash within the IRA should be no tax implications. Are you sure you did not have the cash put into a taxable account? What does the 1099R show in box 7?


#2 If the check went from Fidelity direct to Vanguard Box 7 should be a G. If they sent the check to you and you sent it to Vanguard then that would be a different story


Box 7 is the key in both cases

 

[Walt34]

#2 If the check went from Fidelity direct to Vanguard Box 7 should be a G. If they sent the check to you and you sent it to Vanguard then that would be a different story


Box 7 is the key in both cases

When I did my 457 rollover from Fidelity to Vanguard they did send the check to me directly. However, it was made payable to "Vanguard FBO (For Benefit Of) Walt34". I don't know why they couldn't just send it to Vanguard but that's the way Fidelity did it.

As you note though the code in box 7 is a "G".

 

[ERD50]

When I did my 457 rollover from Fidelity to Vanguard they did send the check to me directly. However, it was made payable to "Vanguard FBO (For Benefit Of) Walt34". I don't know why they couldn't just send it to Vanguard but that's the way Fidelity did it.
...

From what I've read, and in my limited experience so far, is that it seems to work much better when you ask the new institution to 'pull' from the old.

Obviously, the new institution is motivated, and the old has to comply with the law - but they are getting all the forms done by a place that knows how to do this. I think they are more lax with an individual.

-ERD50