Hit a Tax Roadblock and I don't know what to do

Hit a Tax Roadblock and I don't know what to do

Realtor · Delray Beach, FL · Member since 2017 · 102 posts · 20 votes

I am hoping there is an accountant that would be able to assist me with my question because I have hit a roadblock.

A couple of years ago I created a Solo 401K account using funds from a frozen pension which was rolled over into the Solo account with a check written out the name of the solos 401k.  The next year, as it always happens, needing the funds, the bank that was used for the 401k account was closed and that bank holding those funds wrote the check out directly to me which went into a personal account. (I contacted the bank and they stated that there is no distribution. the funds are released directly to me, but they suggested I contact the creator of the 401k)). (I am okay with that explanation)

I contacted the company that opened the 401k and they stated that the company I opened to that the 401k was through needs to create a 1099-R.(I am okay with that as well)

Do I just create a 1099-R? Is this just for formalities. I have to report the money and will do that, but the person who has been doing my taxes for almost 20 years is stating that my company never received those funds and is unable to create the 1099-R so he can't do it. 

At this point I am hoping there is accountant willing to answer this question for me. Would an accountant out there PM me in order for me to get this question answered?

I need to report these funds and want to be able to provide the gentleman that does my taxes with a clear explanation as to how to do it, 

It would be a tremendous help if someone can provide me an answer. 

So let me say this, the company that created the 401k was amazing and their staff is amazing. I just don't want to mention any names  because they were great.

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Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y

Michael,

It's the 401k plan that is required to issue a 1099-R, not the company that you own. Feel free to send me a PM and I will be happy to provide you further guidance (I want to make sure I fully and accurately understand your situation). You may need to amend your tax return if you already filed it but this issue should not be difficult to correct. 

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  • Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    8y

    Michael,  Was it moved into another retirement account or was it held in your personal account If it was sitting in your personal account and you were the administrator for your Solo 401k, then you will need to create the 1099. Who was the company that helped you set it up?

    Btw, I have an office in Spring Hill, FL so hello neighbor.

  • Retirement Accounts Attorney · Southfield, MI · Member since 2017 · 3k+ posts · 1k+ votes
    8y

    @Michael Lopez

    It appears that a Form 1099-R was required in the year the funds went into your personal bank account because that would have resulted in a taxable distribution. Also, 20% of federal taxes had to be withheld from the distribution, and Form 945 had to be filed by January 31 of the year following the distribution. 

  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    8y

    I second George's comment above, since it was premature distribution your 401k plan must issue 1099-R to you and pay 20% tax.

  • Realtor · Delray Beach, FL · Member since 2017 · 102 posts · 20 votes
    8y

    @Steven Hamilton II yes, the pension was rolled over directly into the 401k. and yes I can even agree that a 1099-R is required. And I agree that it would be the company I own that would create the 1099-R for the early distro. But is a 1099-R just created as a formality at this point? When the money that was in the bank that held the 401k distributed the money to me, there was no distro form. So, the bank account for the business itself, never saw that money from the 401k because it went directly into our personal account. THe difficulty the person doing my taxes is that he stating he cant create a 1099-R from my company if it never actually saw that money. The bank account that was created for the company never received the pension. The only bank that saw that money was the one holding the 401k and my personal account. Any help? @Dmitriy Fomichenko @George Blower

    thank you for your assistance!

  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    8y

    Michael,

    It's the 401k plan that is required to issue a 1099-R, not the company that you own. Feel free to send me a PM and I will be happy to provide you further guidance (I want to make sure I fully and accurately understand your situation). You may need to amend your tax return if you already filed it but this issue should not be difficult to correct. 

  • Realtor · Delray Beach, FL · Member since 2017 · 102 posts · 20 votes
    8y

    @Dmitriy Fomichenko is it the company that set up the solo 401k or Fidelity that rolled over the money into the solo 401k? 

  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    8y

    Michael,

    if the distribution was taken from the 401k - then the 401k plan would have to issue the 1099-R. That is pretty simple and straight forward to do. When your did the rollover from Fidelity into Solo 401k, Fidelity would issue 1099 form also, but that is completely separate event. 

  • Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    8y

    As Dmitriy said. It is the responsibility of the administrator of the 401k plan to ensure those are issued.

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