1099-R requirement
I have a client who is working with a brokerage house. The brokerage house rep established a Solo 401K and later transferred the funds to a SEP IRA. The Brokerage House is telling my client that they are not required to provide him/her a 1099-R. The client and their CPA feels certain that the Brokerage House should be provide the 1099-R.
Your thoughts? IS there a requirement for the 1099-R?
Permalink Submitted by Jose Morales on Wed, 2011-05-25 15:40
They should absolutely be providing a 1099-R. If this “transfer” was done as a direct rollover, the 1099-R should have a distribution code “G” and the deposit into the SEP IRA should have resulted in a 5498 being generated showing a rollover of the exact amount that was withdrawn from the 401K.
Permalink Submitted by mk foss on Wed, 2011-05-25 17:39
It could be that the brokerage firm was just the custodian for the solo 401k and the owner-employee was the trustee. In that case the owner-employee would be responsible for filing the 1099-R.
Permalink Submitted by Lee Benson on Wed, 2011-05-25 22:51
Yes, after reviewing the 3 inch plan document binder; the business owner is the Plan Administrator. And it appears the Brokerage house was the custodian.
Next question; is there a specific form to complete in order to properly close out/terminate the plan now that the funds have been rolled over to a SEP IRA?
Permalink Submitted by mk foss on Wed, 2011-05-25 23:59
Form 5500/5500-EZ is filed annually for retirement plans but is not required when the balance is below a specific dollar amount if the plan only covers the owner and spouse. I believe that it is currently $250k. However, the form is required when the plan terminates even if none have previously been filed. The due date is 7/31 for a calendar year plan which can be extended,