aja8888
Moderator Emeritus
Help!
DW has a small IRA (~$60 K) at Schwab that she takes RMDs from. In February 2020, she took her RMD of $3,000 automatically through Schwab’s auto distribute program. Then, unbeknownst to me, she called Schwab and pulled a second check for the same amount.
A few weeks later, she deposited the first check in the bank. The second check was not cashed and was filed away by her. I was not aware of the second check’s existence at all. Let me say that DW has COPD pretty badly, and is on oxygen full time and takes a dozen meds. I believe she has some memory problems that are getting worse each year. We have agreed that she will sign a POA for me to handle her finances so that I can keep an eye on her accounts going forward.
Well, in August (by chance), I took a look at her IRA statement to see if we needed to make any changes or additions based on what was going on in the market. When I was looking at the transactions, I saw a journal entry for $3,000 deposited. I asked her what this was about and she didn’t know. Then she looked in her files and pulled out the $3,000 check she never cashed. The check expired and Schwab put the money back in the account.
OK, all was good until we got her Schwab 1099 this month and the distribution shows $6,000. We called Schwab and asked if they could issue a corrected 1099 for $3,000 since the check was never cashed. After several hours of call transferring, talking to reps who were clueless, and a second day of trying to get an answer (all reps working from home), we were told “no”, just report whatever you feel like as far as the RMD distribution amount. Not a good answer to me. I filed a written complaint with Schwab.
We were told from the rep who was responding to our complaint that Schwab will be issuing an IRS Form 5498 in May 2021 which reports individual retirement contributions for this account. They will not issue a corrected 1099.
That’s as far as I was able to get from Schwab and I have no way of knowing what they will report on that form or if they will say that the contribution of the $3,000 was for a returned and not cashed check and not an unauthorized contribution.
Does anyone here have any knowledge or suggestions as to how to handle the tax reporting on this distribution? Or have any other suggestions as to what we should do to not pay tax on the $3,000 not cashed?
Thanks, aja8888
BTW, I always do our taxes using TurboTax or H & R Block so I have no CPA or accountant to visit with regarding this situation.
A few weeks later, she deposited the first check in the bank. The second check was not cashed and was filed away by her. I was not aware of the second check’s existence at all. Let me say that DW has COPD pretty badly, and is on oxygen full time and takes a dozen meds. I believe she has some memory problems that are getting worse each year. We have agreed that she will sign a POA for me to handle her finances so that I can keep an eye on her accounts going forward.
Well, in August (by chance), I took a look at her IRA statement to see if we needed to make any changes or additions based on what was going on in the market. When I was looking at the transactions, I saw a journal entry for $3,000 deposited. I asked her what this was about and she didn’t know. Then she looked in her files and pulled out the $3,000 check she never cashed. The check expired and Schwab put the money back in the account.
OK, all was good until we got her Schwab 1099 this month and the distribution shows $6,000. We called Schwab and asked if they could issue a corrected 1099 for $3,000 since the check was never cashed. After several hours of call transferring, talking to reps who were clueless, and a second day of trying to get an answer (all reps working from home), we were told “no”, just report whatever you feel like as far as the RMD distribution amount. Not a good answer to me. I filed a written complaint with Schwab.
We were told from the rep who was responding to our complaint that Schwab will be issuing an IRS Form 5498 in May 2021 which reports individual retirement contributions for this account. They will not issue a corrected 1099.
That’s as far as I was able to get from Schwab and I have no way of knowing what they will report on that form or if they will say that the contribution of the $3,000 was for a returned and not cashed check and not an unauthorized contribution.
Does anyone here have any knowledge or suggestions as to how to handle the tax reporting on this distribution? Or have any other suggestions as to what we should do to not pay tax on the $3,000 not cashed?
Thanks, aja8888
BTW, I always do our taxes using TurboTax or H & R Block so I have no CPA or accountant to visit with regarding this situation.
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