Traditional IRA

Submitted by Patrick Valenty on Tue, 2020-10-20 15:53

Member has 10k in a traditional IRA. Can he ask the company to sent him check for the 10K made out to the company he has his present traditional IRA . “company FBO of John Smith. Member claims he will get a 1099 and have to pay taxes on this event.



Submitted by Alan - IRA critic on Tue, 2020-10-20 16:12

  • It is preferable to have the receiving IRA custodian pull over the funds from the custodian in a direct transfer. A direct transfer is not reportable, ie no 1099R and no tax reporting will be required of the member. Alternatively, if the member secures a check payable to “company FBO John Smith IRA”, that is also a direct transfer even if the check is given to member for delivery to the receiving IRA custodian. Note that I added “IRA” to your wording and the “IRA” is important if a 1099R is to be avoided. But even if this is not done correctly and the member must do a 60 day rollover, it still is not taxable, but member would have to report the rollover on his return.  
  • I assume the receiving account is a TIRA as you indicated, and not an employer plan like a 401k. If an employer plan, much of the above paragraph would not apply.

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