Yes, that is exactly right. I didn't see the 1099s till I got them 2 wks ago, and it was clear to me they'd made errors. In fact, it wasn't till my current custodian ( switched a month ago) asked them what the earnings were from last year that we even knew them. They had to go. look it up! When I asked about line 2a, they apologized ( this is UBS) for the mistake, which was that they never took out the earnings, didnt think about them apparently, and therefore put 0 in the box when the excessive contributions were returned. But said there was nothing they could do. I asked them to revise the 1099s but they declined. They were not competent; they didnt consider earnings last year, didn't remove them also as they should have, and didn't include them in box 2a. Hence my not knowing what to do now.
Yes the money was put back into the Trad IRA last yr when I realized do either Trad IRA. That's what generated the 1099s in the first place. There is no IRA for either year. I misspoke -I meant the earnings were never taken back from the IRAs, not Put back. That would be the new excessive contributions for 2024 and 2023. My new custodian will put them back but there is no 1099 that reflects the earnings. It's because I cannot make contributions for 2023 or 2024 currently ( I;m, retired but didnt realized same rules apply to Trad as Roth about earned income cause I've only done Roth since 1998). I was told I could apply those earnings from 2024 to 2025 since we are in 2025 and I can certainly earn 40.00 during the rest of the year thereby being eligible for that. Is that correct? For 2023 it's too late to earn more money so I'd just remove it from IRA to taxable acct and then have to pay the tax, interest and the 6% penalty on amended US and state return.
But again, no 1099 to reference for this.
Be better to do this before the 15th because after that I get another 6% penalty on the 2023 and accrue a new one on the 2024. Im not worried about these small amounts of money. But I've gotten conflicting advice.
A money manager friend who has a big financial services company in Manhattan says he sees mistakes on 1099s all the time, sometimes big mistakes. In some cases he goes back to the custodian- sometimes they fix and sometimes they won't . He said the IRS sees what I see on the 1099 and he suggested just letting it go. it was not my error. Because I will end up with more 1099s for excessive contributions next year. And I will have to amend both my 2023 returns to reflect the new income ( tax on 79.50).
I dont know what to do. Custodian made mistake, takes no responsibility. New custodian said they'll do what I want. Told them first to take out the earnings from the 2 IRAs and they were going to do that before Tuesday. Then I said forget it. I'll pay my tax ( estimated ) for the year and maybe take an extension to think about what to do. I used to do my own taxes in hard copy before these sites. so that's why I know anything at all. I was told many laypeople wouldnt realize there was an issue at all -the ones who rotely fill out the forms- and take the 1099 at face value because that's what we receive.
Please let me know what you would do. it's late and I only have a few days to figure this out.
My new custodian will prob be upset because they got messed up in all this since they now have the accounts if I once again switch to do something now. You can see why I left old custodian. thanks. I hope I hear from you soon as it is now Friday night.
