IRA (Roth) – Late Contribution
Hi, all. Have a scenario I’d appreciate your thoughts on. Client emails financial advisor on April 5th and directs advisor to journal 2016 roth contribution from individual account to roth ira (advisor has authority to do this on accounts). Advisor inadvertently neglects to make the contribution. In spite of the advisor taking full responsibility, custodian will not allow contribution with an as of date (4/18) so that the contribution reflects as a 2016 contribution.
I know there are rules that describe some outs if there is mailing involved (postmark, etc.), but does anyone know of a way to allow this contribution based on the account holder’s intent and the advisor’s willingness to take responsibility for the mistake? There was no mail involved here, just the email exchanges.
Thanks for any guidance.
Permalink Submitted by Alan - IRA critic on Wed, 2017-06-28 00:33
Custodians have some amount of unpublished authority to correct their own errors, but an advisor is considered a representative of the taxpayer in the eyes of the IRS and the IRA custodian. Client does have recourse against the advisor if they wish. I guess if this had been a TIRA contribution instead of a Roth client’s tax return would also be incorrect, but that is small comfort. Finally, if client has been making prior year contributions, they now have the chance to make current year contributions with this money, so would make the 2017 contribution unless there is a reason such as uncertain income eligiblity to qualify at this time.