5498 Error Follow up
Follow up to alaniracritic’s response to my earlier question “5498 Clarification/How to Correct these 5498 Errors. Yes, this is regarding a just received 5498 for 2016. In this scenario, a check was sent to the decedent in 2016 for what the Custodian thought the owner should have received as their 2016 RMD before the Custodian was informed the owner had passed away. When the Beneficiary informed the Custodian, at the Custodian’s request, the check was returned and put back into the account since it should not have been issued in the first place. But no contribution was made to this account for 2016 and it is a closed account so no RMD is required for 2017. Thanks
Permalink Submitted by Jose Morales on Wed, 2017-05-31 22:28
I’m guessing that the amount in box 1 of the 5498 in question is the same amount as the check that was issued in 2016? If so, it sounds like someone coded the deposit as a contribution. They may have intended to code it as a rollover, although that still would not have been the best thing to do. This kind of thing happens when a front office or sales person thinks they can handle “corrections” in the same way they would any other non-retirement account and they don’t take the time to speak to their back office retirement team. You need to make sure they are working with whoever is repsonsible for servicing retirement accounts and that they have the full story so they can untangle this mess. They would not be able to calculate an RMD without a balance in the account as of 12/31, so make sure that the account in question has actually been closed and the funds transferred to the inherited IRA.