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Home >> Accounts >> Retirement Accounts
Retirement Plans Rolled Over and Taxed Twice
In March 2006, my wife combined three different retirement plans (Deferred compensation, some IRA CDs and a pension plan that qualified for IRA rollover). The total came to about $190,000. The funds were placed in a four years traditional CD with a bank. From the above total, about $18,000 was contributions after tax made by my wife to the pension plan which before was reported, but not taxable. Last year she received her minimum required distribution, but at the end of the year the bank provided the 1099-R forms with the whole amount paid to her as taxable.
At the time the direct transfer was made in 2006, we gave to the bank the breakdown of what was taxable and the amount that was not. We went this year to the bank to see if they can correct the situation, but we were told that their CD system cannot differentiate from the MRD amount what is taxable and what is not, and that as far are they are concerned the whole amount is taxable. I do not think this is correct because my wife is being taxed twice on the original $18,000. What can she do to convince the bank that this is not right? |
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 Actually, when the bank does not have independent knowledge of contributions, it is the taxpayer's responsibility to report the appropriate amounts in the appropriate places when filing his or her tax return. It's often the case that a bank or other custodian cannot report contributions accurately following a transfer of IRA funds. It is also the taxpayer's responsibility to maintain records to document before-tax and after-tax contributions. You may need assistance from a tax professional to complete the return properly, at least this year.
Published on BankingQuestions.com 8/25/08
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