1099DIV Brokerage FBO IRA Questions

[syoung123]

Hello, I am reposting this question because I found some additional info after my initial post.  Please see below.

I converted my 401K into a rollover IRA in 2025, 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, Pay To - "brokerage name" CUST FBO "my name" IRA.  The brokerage company told me to endorse the check and mailed it to them to deposit into my rollover IRA, which they did put into my IRA.  Now Computershare mailed a 1099DIV for the dividend amount to my address, and the 1099DIV shows the recipient’s name as, "name of brokerage" CUST FBO "my name" IRA.  The 1099DIV also shows my social security number as recipient ID.  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 and it shows my social security number?  If I report it on my tax return as dividend, I would be paying tax on this dividend distribution in 2025, and when I start taking money out of my IRA, this amount would be taxed again because the dividend was put into the rollover IRA as “tax-deferred”, so I would be paying taxes on this dividend twice.  Computershare told me they were required to issue a 1099DIV, and they could not advise me what to do with the 1099DIV.   The brokerage company issued a 1099R to me showing the money transferred from my 401K and the company stocks which Computershare transferred back to the brokerage company.  The 1099R does not appear to include the dividend check amount.  When I asked the brokerage company, I could not find a person to give me a sensible response.

What should I do with this 1099DIV?  Please advise.  Thank you.

[fanfare]

enter the Dividend as nominee income - income that belongs to someone else.

It will be subtracted.

The "someone else"  is your IRA.

@syoung123 

[ReneV4]

To report this 1099-Div so that you are not double-taxed, but still comply with IRS reporting requirements, do the following:

1. Go to Wages & Income on the left panel within TurboTax
2. Select +Add more income and scroll down to Investments and Savings
3. Click the down arrow to expand and click Start to the right of Dividends on 1099-Div
4. Click on +Add investments, then select the Dividends box and Continue
5. Enter the information from the 1099-Div, then Continue
6. Check the, "I need to adjust these divdends or this is an EOP distribution" box
7. Select, "I need to adjust these dividends", then Continue
8. In the "Tell us about your dividend adjustment" section, enter the adjustment amount, which is the dividend amount
9. Select "Other adjustment, including restricted stock dividends reported on W-2", then Continue

Note: Be sure to compare your Form 5498, once received, to ensure that the dividends were included in the rollover amount.

[syoung123]

Thank you all for your responses.  The brokerage company put the dividend into my IRA, but there is no related 1099(R?) from the brokerage company to report this transaction.  My IRA was increased by this dividend amount as "cash deposit" that was lumped into one line item along with the company stock shares at their transferred price that said - [rollover contribution "name of company that I worked"] on the brokerage IRA statement.  Based on your responses, it looks that the best way is to report the dividend that shows on the 1099DIV as dividend on schedule B?  And if I used the nominee distribution to adjust the dividend to zero on schedule B, am I supposed to send a 1099DIV form to the "actual owner", which would be the brokerage company, and also file a form 1096 with IRS?  I am kind of confused; the nominee distribution adjustment instruction (see below) appears to say I need to send a 1099R form to the "actual owner" and file a form 1096 with IRS.  The tax on the dividend probably is about $25, maybe it is better to just report it as dividend and pay the tax on it, and not worry about any adjustments.

"A 1099-DIV nominee is an individual who receives dividend income in their name, but the income belongs to someone else (e.g., joint accounts, trust, or inherited property). The nominee must report the total, then deduct the portion belonging to others as a "Nominee Distribution" on Schedule B. The nominee must issue a new Form 1099-DIV (by Jan 31) to the actual owner and file it with the IRS using Form 1096 by Feb 28 (Mar 31 if e-filed)."

(sorry about the cross posting.  I re-posted the question because  I found additional information on my initial posting). 

[DianeW777]

Follow the procedure indicated by @ReneV4 and you reach resolution without any need to perform the nominee actions. The nominee procedure is not exactly the action necessary for this situation and you have already taken the steps to confirm the dividend was part of the rollover.

As indicated be sure to check your Form 5498 when received to confirm the dividend was part of the rollover.

@syoung123 

[syoung123]

Hello, sorry about the delayed response.  I followed the instructions to enter the company stock dividend, and then I did the "I need to adjust these dividends", "other adjustment" by entering the same dividend amount.  Looking a the hardcopy printout of the 1040, it appears that the only info shown about the adjustment is on Schedule B, in the dividend section, there is an "other adjustment" entry of the negative dividend amount to offset the 1099DIV dividend entry to zero.  There appears to be no other changes or explanations of this "other adjustment".  Am I correct?  And how would IRS accept the "other adjustment" without an explanation?  Thank you again in advance.

[DianeW777]

Yes, you are correct. The adjustment is used to remove the dividends from being taxable on your return, and there is no special form to make detailed explanations.

If the IRS does have a question, you would receive correspondence from them much later in the year. Be prepared by keeping all necessary information in your tax return files.

@syoung123