Hello, does anyone have any latest updates on this? I have the same issue for 2025. I roll-overed my 401K to Empower brokerage traditional IRA in early May 2025. A portion of the 401K was converted to common stocks of a company, and Empower used Computershare as "transfer agent" to convert the shares and held in a Computershare IRA account. Empower told me, once the account at Computershare (as IRA) has been setup, I would request Empower to transfer the stock shares from the Computershare account to the Empower traditional IRA account. However, in the mean time, there was a dividend distribution, and Computershare sent me a paper dividend check with the payee name - Empower as the custodian for the benefit of me (my SSN would be on the 1099Div even though the account name says Empower is the custodian). I called Computershare several times, one time a rep told me the account needed to be setup as "tax-exempt" but I couldn't request making the change because I am not the owner of the account. I called Computershare back with an Empower representative, and Computershare told me that they couldn't do tax-exempt. Computershare standard process is to issue a 1099Div, it would show the dividend as taxable dividend, when the 1099Div is issued, I would give the 1099Div to Empower, and Empower would give me some kind of proof that the check was deposited into the Empower IRA account, and therefore the dividend would not be taxable (it would be tax deferred until I start taking money out of my Empower IRA account).
This process described by Computershare doesn't make sense to me. The 1099Div issued by Computershare will be reported to IRS to show the dividend distribution as taxable dividend income. How would Empower provide evidence to IRS that the dividend check was deposited to my traditional IRA and therefore tax-deferred? It looks that I can’t request any “tax-exempt” changes to Computershare. I would think this scenario happens regularly and Computershare should know what needs to be done. But I can’t understand how this process would be reported to IRS showing the 1099Div amount is non-taxable for 2025 (or tax-deferred).
