What to do when one’s IRA custodian refuses to correct a clerical error?
I just received a 2017 Form 5498 IRA Contribution which my IRA Custodian furnishes to the IRS. It reads $6500 rollover contributions. The problem is that information is wrong in part due to a clerical error I made when sending in my Traditional IRA contribution last year and it is in part due to the custodian’s decision to record the contribution in a tax year later than the one I specified. Unfortunately, the custodian has been unwilling to correct the situation.
In more detail, in making a prior year IRA contribution, I checked rollover by mistake when I download the form from their website (it is a very small box). The custodian recorded the transaction as a 2017 rollover rather than a 2016 (prior year) individual contribution even though I definitely specified tax year 2016 on their form and I would suppose should have been a red flag of an inconsistency and at a minimum should have been prevented by an edit check on the form before I could download it.
Since late March, I have used email, regular mail, and talked to a representative stating that I did not have a rollover and asked to have the situation corrected to 2016 (prior year) individual contribution.
But the custodian’s position is rigid: They maintain that the original order met their standard for processing validity, and the way they recorded it is the way it will stay.
Is Form 5498 information ever disputable with the IRS and could you tell me what options I might have at this point?
Your advice is greatly appreciated.
Permalink Submitted by Alan - IRA critic on Wed, 2018-05-23 22:23
If you reported your 2016 IRA contribution properly and there is nothing to indicate an excess contribution, I would simply prepare all the documentation you need (copy of IRA statement showing the contribution and the deposit form if you kept a copy) with your personal notes and keep this in a file should the IRS inquire down the road. That could be 2 years from now. The IRS is much more likely to notice an unreported 1099R than a 5498 for which there is no 1099R to match to. And the 5498 does not show any more than you could have contributed as a regular contribution. I assume you filed your 2017 return without mention of any of this, but you may have made a 2017 regular contribution that you reported.
Permalink Submitted by Mark Gill on Thu, 2018-05-24 01:43
AlanYour advice is very helpful and very much appreciated!
Permalink Submitted by Barrie Zultowsky on Wed, 2018-05-30 03:05
Hopes dashed. None of their rules were broken. Nothing they can do about Fidelity’s rep’s failure to say anything enlightening except to ask if I wanted taxes withheld from the cash from the sale of the BABS, which signalled nothing to me at all at the moment. I had given nothing in writing to the FINRA rep, so this parting phone call led me to rehash the situation that brought me to that point. Fidelity had cut us off from communicating with our assigned financial advisor on 4/14/18, which perhaps I hadn’t told her about when verbally recounting my story. Would that be a rule breaker?Recently I recieved an additional 2017 Form 5498 showing an additional distribution from the BABS account of $14.11 and was told the account was closed, so it had to be distributed. Did the account have to be closed? It still appears on my Fidelity webpage as an empty Position.I’ve also heard from Fidelity that they’ve filed Form 8868 I’m sure as a result of our elevated income in preparation for filing a 990-T to show additional UBTI if their calculations show there is, and we will incur penalties and taxes if the 990-T must be filed. There’s no end to the fallout from the excessive RMD. This all makes the health insurance surcharge seem acceptable.Thanks again for any info you can provide.