Custondian Mistitled the Annuity Contract
The client surrendered his Annuity contract in early 2011. The contract did not mentioned 403b or IRA rollover. The former advisors staff
at the client’s request, transferred the entire contract, $35,000 to his trust account. The paperwork they received from the Insurance Company did not list a box for IRA rollover.
Last month, he received a 1099R indicating this is a taxable distribution. Client is over 70, and took his MRD on his IRA assets, not including of course this contract. The custodian who issued the 1099 when reached, indicated that some paperwork indicated non-qualified and some paperwork indicated qualified. They said it originated from the original contract from a prior Life Insurance Company.
If he is paying taxes on this amount, it will cost him over $8,000……is there any relief. Should I contact the IRS.
Any suggestions would be appreciated.
Permalink Submitted by Bruce Steiner on Tue, 2012-03-06 03:53
The IRS has discretion to waive the 60-day deadline for a rollover. We’ve gotten relief in several cases. Given the legal fees as well as the IRS fee, it may not be worth the effort for $35,000. Also, in this case, if he gave the money away to a trust, that may make it more difficult to get the IRS to waive the deadline.