UBS Won't Correct The 1099-R

[Sandi_k]

So...my MIL took a chunk of money out of an IRA in mid-October 2023. We realized it over Thanksgiving weekend, and arranged for her to re-deposit the funds at UBS within the 60 day window.

UBS has now issued a 1099-R, showing the withdrawal - and with the entire amount in the taxable box! Which triggers a 6-figure tax bill.

We called to discuss issuing a corrected 1099-R, and the rep said that they would not issue a corrected 1099; instead, they will mail my MIL the account statements, showing the withdrawal, and the re-deposit, within the 60 day window.

This seems ridiculous to me - how can they blithely send out a tax document so blatantly wrong? Don't they have an obligation to correct it? Has anyone every had this situation, and DIDN'T get audited? I am distressed, but it's not my money, and not my mom.

Any reassurance or suggestions are welcome.

[terran]

It doesn't sound like it's wrong. She took a distribution, which should generate a 1099-R. For example, what if she had rolled it over to and IRA at another institution? UBS would have had no way of knowing that.

Assuming she was eligible for an indirect rollover (within 60 days and no other indirect rollover within 12 months) then Form 1040 line 4a should be whatever is shown on the 1099-R and 4b should be 4a minus whatever was contributed as a rollover contribution. The word "Rollover" should also be entered to next to line 4b. 4b is likely $0 unless she didn't roll it all over, which would include if tax was withheld from the distribution and she only rolled over what she actually received. If she rolled it all over and should have taken an RMD then she'll need to deal with that.

[Sandi_k]

Great, thanks.

Yes, she took the RMD. And yes, funds were withheld. I guess we're now looking for a Form 5498, which will show the re-deposit.

I expect it to arrive after April 15th, so given the new "accountant", I expect that an extension will be filed. My BIL is having the taxes "done" by the daughter of his former tax preparer. She shadowed the tax prep last year, and I was not impressed...

[terran]

Yes, you will get a 5498 (probably in May?) and should keep it, but you don't need to wait for it. You can file based on your records of what was deposited.

[Sandi_k]

Yes, you will get a 5498 (probably in May?) and should keep it, but you don't need to wait for it. You can file based on your records of what was deposited.

It's not my decision to make - as noted, BIL is handling it for his mom.

[terran]

Sorry, I didn't really mean you as in you. More you as in one.

[Sandi_k]

Sorry, I didn't really mean you as in you. More you as in one.

Gotcha. ;)