Bank missed monthly distibution
L1: Bank missed monthly distibutionI have a SEPP with my local bank with monthly distrubutions that are automatically done and deposited into my bank account. While preparing my 2009 income tax return I noticed that my 1099-r amount did not match last year’s 1099-r. It was short by exactly one months distribution amount. I then found out that the bank did not do a distrubution for the month of May. This SEPP has been in place for about 5 years. To make matters worse 2 years ago my bank started a policy that it will always code 1099-r with a “1” and never a “2”. What is the best way to resolve this. I was thinking that they should make up the missed distribution, create a corrected 1099-r and provide a letter stating that the bank made a clerical error by not doing the May distribution and corrected it as soon as it was discovered. Any advice would be greatly appreciated.Jay2010-03-18 14:01, By: Jay, IP: [220.127.116.11]
L2: Bank missed monthly distibutionIt would be great if they would make up the missing month now and put the amount on a revised 1099R for 2009, but they probably will not do that, even if you threaten to take action against them. The problem is that they will say that you had the responsiblity to catch this error and report it to them prior to year end. Lacking any success with the bank, the following article on error correction PLRs addresses your situation exactly. The good news is that the IRS may well waive your penalty and the bad news is the cost for the PLR and the time it takes to get a ruling.The obvious lesson here is that you cannot trust these banks not to make critical errors, so you need to double check your distributions no later than early December each year so that you have time to get errors like this corrected.http://www.72t.net/Articles/ArticleShow.aspx?WA=870e2089-7523-49e3-8252-b2e2df8cf6ae2010-03-18 17:35, By: Alan S., IP: [18.104.22.168]
L3: Bank missed monthly distibutionI would demand that the bank correct its mistake, and make the missed distribution now. Then ask them to issue a corrected 1099-R for 2009 as if the correct told had been made.
However, regardless of their action, if they do not issue a corrected or new 1099-R if they have not yet submitted their copy to the IRS, I would report the correct annual amount on the tax return, and attach an explanation. I believe that the IRS would not penalize the taxpayer for the bank’s mistake.If there is any future penalty or disallowance of this approach, then I would request “equitable resolution” from the IRS, the Commissioner, Taxpayer Advocate, or the Congressman, which is within their power and authority to grant.2010-03-19 01:40, By: dlzallestaxes, IP: [22.214.171.124]
L4: Bank missed monthly distibutionI have no problem taking an aggressive posture with this bank. It is probably worth the effort, but I think they will try to put enough of the blame on you in the hope you will drop the effort.But let us know what happens. It will provide us with a better feel for how various institutions address problems like this, whether they are willing to take responsibility for their errors or will just look for a reason to pass the problem on to you. I suspect the latter, but still hope you can get them to step up.2010-03-19 02:24, By: Alan S., IP: [126.96.36.199]