Earlier this month we received a levy (not from the IRS) against the IRA plan of a client, the levy was clearly marked as including IRA accounts held by us. Just today we received the cashier’s checks back with a notice stating there was a release of levy, but with no further instructions. I’m stuck between a rock and a hard place because the client wants the funds simply returned to the IRA account and no reporting to be completed (and unfortunately the higher ups want this resolution as well).

The levy was valid and specifically included the IRA accounts so it seems clear to me that the withdrawl of the funds were a reportable distribution. Usually for a release of levy the entity to which the funds were remitted would simply give the funds back to the individual themselves, not send the original cashier’s check back to us (and the fact this is a cashier’s check presents a problem itself).

At this point I believe we have to send the cashier’s check back to the party that is was originally made payable to, they must proceed to deposit the funds into their account, then reimburse the individual themselves. Then if the client wishes to return these funds they would simply need to complete a rollover within 60 days.

If anyone has ever found themselves in this situation or can provide any insight I would greatly appreciate it.