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?
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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.
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