1099DIV Brokerage FBO IRA

Forum|Forum|4 months ago
January 28, 2026
1 reply
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Hello, I converted my 401K into a rollover IRA, both are administered by the same brokerage company. My 401K had about 200 shares of the company stock of the place that I worked. Instead of having to convert the stocks into cash first and then deposited into the rollover IRA like the other mutual fund investments, they allowed these company stock shares to be transferred in the form of stock into the IRA. However, instead of a direct transfer from the 401K into the rollover IRA, this brokerage company used Computershare as the transfer agent, so the stocks were moved from my 401K to a Computershare account, then I had to request Computershare to move the stocks to the rollover IRA. In between the time of processing, the stocks paid a dividend and a check was sent to me with the "brokerage name" FOB of "my name" IRA. The brokerage company told me to endorse the check and mailed it to them to deposit into my rollover IRA. Now Computershare mailed a 1099DIV for the dividend amount to my address, and the 1099DIV shows the recipient name as, "name of brokerage" CUST FBO "my name" IRA. The 1099DIV has my account number setup by Computershare, but it does not have my social security number. Since the dividend check was deposited into my rollover IRA, and the payee is "name of brokerage" CUST FBO "my name" IRA, am I supposed to put it on my tax return as taxable dividend since I got the 1099DIV? If not, what do I do with this 1099DIV? Please advise. Thank you.

Best answer by ThomasM125

How do I increase the basis of my IRA? Would that be to report the dividend amount as non-deductible IRA on Form 8606? If so, how do I input it via TurboTax?

Yes, you would enter a non-deductible IRA contribution in TurboTax, if you came to the conclusion the income was taxable and you and you turned around and made a non-deductible contribution to the IRA. You do that in the Deductions and Credits section of TurboTax, then Retirement and Investments, then Traditional and Roth IRA contributions. Enter it as a traditional IRA contribution and when asked if you want it to be non-deductible, answer "yes" and enter the amount.

MinhT1

Level 15

You can disregard this 1099-DIV as this is made out to your IRA. All earnings with the IRA are tax-deferred.

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syoung123Author

Level 6

Thanks for your response. After I posted my question, I did a search to see if there were similar questions and I found one post per below. It seems to say it is taxable as non-deductible IRA contribution, and it doesn't make sense to me. When the stocks were in my 401K, all the previous dividends were put into the 401K as tax deferred. If the brokerage company did not use Computershare as transfer agent, and moved the stocks directly into the rollover IRA, this dividend would have gone straight into the IRA and I would not have received a dividend check. Going forward, all the future dividends would be tax deferred in the IRA until I start take money out the IRA. So this particularly dividend check should be tax deferred (not taxable for 2025), and your response would be correct. Computershare told me they were required to issue a 1099DIV, and they could not advise me what to do with the 1099DIV. When I asked the brokerage company, I could not find a person to give me a sensible response. Based on what I saw in the post below, please re-confirm that you are correct, that it is not taxable for 2025, and I don't need to do anything with this 1099DIV. Thanks much.

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post from another person

1099-DIV issued on non-taxable money

I completed a rollover from a 401K to a Traditional IRA in Oct 23. I also wanted company stock transferred in kind to the IRA. The company stock was at the transfer agent (so no longer in the 401K) when the company issued a dividend. The dividend was sent to me via check along with a 1099-DIV. The check was made out to my broker FBO me/ Traditional IRA. The check was deposited in the Trad IRA. The problem is the 1099-DIV shows the dividend as Ordinary (taxable) dividends and is reported to the IRS. The transfer agent says that the 1099-DIV should go to the broker/custodian and they will somehow also report to the IRS that the dividends went to the Trad IRA so no taxable event occurs. I am only trying to understand the mechanism to how it should be reported, i.e. so no taxable event occurs. Any suggestions from someone knowledgable on the subject?

Not A Product Question
posted
‎February 21, 2024 12:01 PM
last updated ‎February 21, 2024 12:01 PM

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DaveF1006
Employee Tax Expert

No. The dividend is still taxable to you even if the dividend check was deposited into your Traditional IRA. The dividend will be treated as a non-deductible contribution in your Traditional IRA. Once you have entered the 1099 DIV information in your return, this is how you report this as an non-deductible contribution.

Login to your TurboTax Account
Click on "Search" on the top right and type “IRA contributions”
Click on “Jump to IRA contributions"
Select “traditional IRA”
Answer “No” to “Is This a Repayment of a Retirement Distribution?”
Enter the amount you contributed
Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
Enter your basis in the Traditional IRA from your 2022 Form 8606 line 14 (if you had a basis in the prior year)
On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).