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Client received a combined 1099-DIV, 1099-INT, and 1099-B on their SEP IRA account - why?

JCAIN1979
Level 1

Client received a combined 1099-DIV, 1099-INT, and 1099-B on their SEP IRA account  -  all stock is in the SEP IRA - they are still just contributing to it and nothing has been withdrawn.

#1 - why did they even receive the 1099's? they are not large amounts but I thought it was not taxed until withdrawn -   1099-DIV      Line 1a 907.84;  Line 1b  520.89;  Line2a 278.73   

 1099-INT  21.42

1099-B    Box D Total  1985.89

#2 - If they are not taxable -

**Does the Wealth Management need to file corrected 1099's to show zero?

++Or how do you enter these amounts and where - so you do not get a letter of not reporting from the IRS or they show as taxable?

Thank you

 

 

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11 Replies 11
qbteachmt
Level 15

I can think of two things to confirm:

The account really did get set up as SEP IRA.

There is no carry-over excess contribution being managed.

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"Level Up" is a gaming function, not a real life function.
JCAIN1979
Level 1

It was setup as a SEP IRA  many years ago - 

 

And there is no carry-over excess contribution

 

Thank you

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George4Tacks
Level 15
Is the ID # on the 1099 the Social Security Number of the client?

ex-AllStar
JCAIN1979
Level 1

Yes it is

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BobKamman
Level 15

Don't you just love it when these problems are first noticed in the final week before October 15 deadline?

SEP's don't issue 1099's.  I hope you're not planning on taking a deduction for contributions to it. 

JCAIN1979
Level 1

Client just dropped off last of information Saturday  

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BobKamman
Level 15

That doesn't matter, it's all your fault anyway.  It's always the preparer's fault.  But when did he drop off this 1099?  I discourage clients from bringing me stuff piecemeal.  Generally, I don't start on a return until I have everything I need (unless the client wants to pay me two or three times the fee for doing a complete return).  They don't realize that just because they have only one preparer, doesn't mean that their preparer has only one client.  

Sometimes, though, you have to get started on the return by April 15 to figure out how much to pay with the extension request.  Is this a new client?  Was this a new SEP?

JCAIN1979
Level 1

Yes 😤 and yes new client - had them bring in old returns with last of info on Saturday, when kept pressing to bring in all 1099's - brought their books in Oct 1st  ☹️- felt sorry for them as they were panicked and a friend of another client -  think they are new because probably got "fired" from last preparer -   They filed an extension somehow (I hope more than just the paperwork).  Old returns show it from prior years - they swear everything at that Management company is ALL in their SEP account - from the beginning, wondering if they have just an investment account in addition, and they think of all that money for their retirement.  Will have to call Management people tomorrow.  As they say " no good deed goes unpunished"

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IRonMaN
Level 15

Sometimes we have to face reality- we all have a certain number of morons for clients.  I would be willing to bet a case of of lutefisk that your client doesn’t know what they are talking about.  I have had a number of clients over the years that don’t know if they have a retirement account or if all of their funds are are sitting in a mayonnaise jar under Funk and Wagnell’s front porch.

ACME Taxes, Tattoos, Tires and Tasmanian Devils - one free devil with every return.
BobKamman
Level 15

And some authorities don't realize the name is Wagnalls, with no apostrophe -- Mr. Wagnalls was a college classmate of Mr. Funk.  

"Wealth Management" is a generic term that I suspect is used by some boutique broker in a 100% commission arrangement with a firm that provides a minimum of supervision.  When I come across one of those I use the FINRA BrokerCheck to see what kind of record the person has.  Of course it doesn't do much good to point this out to a client, because if you can't trust your broker, who can you trust? And the individual is invariably a stellar salesperson.  

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qbteachmt
Level 15

"and they think of all that money for their retirement."

Exactly.

"because if you can't trust your broker, who can you trust?"

As a previous plan administrator, I can tell you some real horror stories from trying to straighten out brokers' mistakes and outright lies to their clients.

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"Level Up" is a gaming function, not a real life function.