We transferred our client’s UniK plan from Schwab to National Financial in 2009. It was a direct transfer and no funds were received by the client. Her CPA expects she should get a 1099-R, but Schwab did not generate one. I want to clarify whether this non-taxable event is non-reportable by Schwab or whether a 1099-R should have been generated. Thank you!
Thank you. I hadn’t considered this a “rollover” since the funds stayed in the same plan. I considered it a transfer but I see that I may not have been clear in my original post. We changed custodians of the full plan from Schwab to NFS. Can you please clarify whether this is still considered a rollover? Thanks!
A direct rollover is reported as a distribution and rollover, even if done by direct trustee transfer. There does not appear to be any reporting exception when the plan itself is maintained and just the custodian changed. The 1099R Instructions make such a 1099R reporting exception for IRA to IRA transfers and in that case the plan is not changing either, just the IRA custodian. This exception is in the 1099R on p 4, “Transfers”. The final section states:
“You must report ……………direct rollovers from qualified plans………………” (non applicable verbiage omitted).
From qualified plans (above) should be interpreted to include “from one custodian of the plan to a new custodian of the same plan.”
There are also likely to be differences between the Schwab agreement and the NFS agreement, so while the type plan remains intact, the provisions may be changing somewhat.
That said, I would still be interested in what Schwab has to say regarding the lack of a 1099R. They should not be applying IRA rules to this, but they may know of another provision I am not aware of.
Permalink Submitted by Alan Spross on Mon, 2010-03-22 18:23
There should be a 1099R on all transfers FROM a qualified plan, whether to an IRA or to another QRP. Refer to the 1099R Inst for use of the G Code on p 12 of those Instructions. Client would then report the rollover on lines 16a and 16b with 0 on 16b and “rollover” entered next to 16b. Schwab should be contacted to see why they did not issue the 1099R.