SEP IRA contribution of stock
A business owner made a contribution of stock worth approximately $21,000 into his SEP IRA in 2015. This improper contribution was not discovered until 2016. Must the stock be removed as an excess contribution for 2015? If the stock must be removed and the business owner refuses to do so, how does the IRA custodian handle this situation? How would the IRA custodian report this, if at all?
Thank you for your thoughts.
Permalink Submitted by Alan - IRA critic on Tue, 2016-05-03 22:31
None of the EPCRS templates address this unique error, so I would call 877-829-5500 and determine what they recommend given an uncooperative customer. If the owner refuses a corrective distribution he would be even more unhappy about amending his tax return eliminating the deduction. He would have a legitimate beef on why the custodian accepted the shares as a regular SEP contribution in the first place. Custodians only report actual contributions whether excess or not. The 5498 reporting SEP contributions made in 2015 is due this month, so the custodian should ask the DOL whether they should report this on Form 5498 or not.