SIMPLE IRA Contributions
A sole proprietor Client made a contribution to his SIMPLE IRA in January 2008. Originally earmarked the contributions for tax year 2007. When completing the 2007 tax return, it turns out they didn’t have enough income to deduct the amount contributed for tax year 2007. Can they leave the extra contribution in the account and allocate it to tax year 2008 (since it wasn’t taken as a deduction on the 2007 return), or must the excess be removed?
My understanding is that the custodian reports contributions to the IRA in the calender year they are received and it is up to the taxpayer to allocate to the proper tax year on his return.
Thanks,
Steve Fisher
Permalink Submitted by David Schlossberg on Mon, 2008-08-25 23:32
A 1099 should of been issued from the custodian for the contribution. Assuming they did indeed issue the 1099 for 2007, it is possible they may amend the 1099 per your request to do so. I have been sucessful in getting custodian’s to do such amendments, but hoestly, never this far out.
That would be my first try. If that doesn’t work,. Plan B (I’d have to give that some thought).
Permalink Submitted by Denise Appleby on Thu, 2008-08-28 06:31
[quote=”david”]A 1099 should of been issued from the custodian for the contribution. Assuming they did indeed issue the 1099 for 2007, it is possible they may amend the 1099 per your request to do so. I have been sucessful in getting custodian’s to do such amendments, but hoestly, never this far out.
That would be my first try. If that doesn’t work,. Plan B (I’d have to give that some thought).[/quote]
Hi David, I think you meant 5498 right? As 1099-Rs are issued only if distributions are taken.
The 5498 will be issued for 2008, even though the contribution was intended for 2007.
Steve, it depends on what you mean by ‘earmarked’. Your understanding is correct; the custodian is required to report the contributions on the 5498 for 2008. IRS rules- if they do otherwise, they would be breaking those rules.
I would need to ask you a few questions in order to give you a definitive response. Much quicker if we talk-if you like, you may call me at 973-313-9877.