Commingled roth with 401k check
I have client who brought in a check from a 401k payable to my custodian that has Roth and pretax funds commingled. Can we request the check be re-issued? If they won’t re-issue how can this be corrected. The check has not been deposited into their traditional IRA.
Permalink Submitted by Dan Zaehring on Tue, 2022-04-26 20:49
Is the intent to place the funds into both a TIRA and a Roth with the same custodian? Is the custodian refusing to split the funds because they are one check?
Permalink Submitted by Alan - IRA critic on Tue, 2022-04-26 21:11
This is how amounts are deposited into ineligible accounts. Ideally, there should be a separate direct rollover check issued for each distribution payable respectively to the custodian FBO client’s TIRA and to the client’s Roth IRA. Was the client provided with instructions to the IRA custodian regarding the correct amount for each account? If not, then the client needs to be concerned how the total should be split, and if the 1099R forms (which cannot be combined) will be correct in January. We hear of many cases where a check like this is incorrectly deposited because the receiving custodian is no more careful regarding the breakdown than the issuing custodian is.