Annuity (or IRA) distribution timing
A client requested distribution on Dec. 22 for the 2011 tax year by EFT transfer to spread the dsitribution over 3 years. The insurer held it until Jan. 3 and sent it by snail mail. Can the client get the IRS to include the distibution included in the 2011 tax year? ❓
Permalink Submitted by Alan Spross on Sat, 2012-02-18 00:04
It will probably be an uphill battle. I would first try to get the custodian to issue a 1099R for 2011. Even that will be difficult unless you can prove that it was 100% their fault, but they will use the late date you requested the distribution as justification for the delay.
If that fails and you decide to report the distribution in 2011, if you get no response from the IRS by December you won’t know what to do about a 2012 distribution. Then you will get the 1099R for the first distribution early in 2013 and have to again explain the situation to the IRS that you chose to report it in 2011. They may or may not agree and you will be a situation of uncertainty for quite a long time. Therefore, I would really press the custodian to issue the 1099R for 2011 if at all possible. That will also provide certainty right away if they will do it.
Permalink Submitted by Neil McCarthy on Sat, 2012-02-25 22:24
Alan –
Thanks for the quick reply. Unfortunately we already did that and the custodian said “no.”. Is there any chance we could get the IRS to overrule them and let us use 2011 without a PLR?
Permalink Submitted by mk foss on Sat, 2012-02-25 22:46
The taxpayer reports on a cash basis – if no cash was received until 2012 I can’t see IRS changing the reporting for you. Even if you applied for a PLR, I don’t think you’d get any relief. You’d have to show that the EFT was initiated in 2011 and didn’t go through for some reason.