"Mike Hirabayashi" <mike[at]jls.com> wrote:

- quote -

Your issue is with the brokerage. If you never requested a
conversion to a Roth (and ask the brokerage to provide some
sort of proof that you did) then when they cannot show
evidence to the contrary they should retitle the account.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

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Mike Hirabayashi wrote:

- quote -

While I would wait to see what Ameritrade does, in general
the answer *should* be no, especially assuming you have
copies of the old documents showing it as a regular IRA
prior to the transfer. There is a case (Wood, 93 TC 114)
that involved a brokerage accidentally doing a rollover to a
regular account that wasn't noticed until after the 60 day
period back when the IRS did not have authority to waive the
rollover rules. The Tax Court held in that case that the
rollover was still valid since the taxpayer did not cause
the problem *AND* corrected it as soon as the taxpayer
became aware of the problem.

Given your facts *AND* that the IRS has been rather generous
about allowing Roth conversions to be "undone" after the
fact in private letter rulings, I don't see a major problem.
However, if Ameritrade refuses to admit an error it could
make resolving it more of a pain than it needs to be if the
IRS were to issue a notice. But unless Ameritrade reports
either the Roth conversion *OR* a contribution/rollover when
they put the funds back in a regular IRA account, I doubt
you'll hear from the IRS.

Basically--work on Ameritrade right now <grin> . If you need
to, you might want to push to speak to the legal department
to get this resolved (or hire an attorney would will do the
same thing). Unfortunately, dealing with discount
brokerages can be a problem with issue like this...

--
Ed Zollars, CPA
Phoenix, Arizona

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I just noticed that a brokerage account, originally opened
as a rollover of a traditional IRA, is now listed as a Roth
IRA on my account statements, even though I had never
requested or authorized a recharacterization. I have never
received a 1099-R or any kind distribution notice.

The account is at a brokerage that was taken over by another
firm recently (originally Datek, which was bought by
Ameritrade), so I suspect that perhaps it was an inadvertant
paperwork error in the confusion of merging the two
companies records. However, in checking back thru past
statements, it appears to have changed from "IRA" to "Roth
IRA" 11 monthes ago (I just noticed it recently though),
while the official change from Datek to Ameritrade occured
only in the last few months I think... The firm's client
services dept claims it must have been opened as a Roth --
but they admit that their records are incomplete because of
their merger and are looking into it further...

In any case, I am worried about the tax implications of the
recharacterization, particularly that it occurred (on paper)
last tax year (and since I just noticed it, it wasn't
reflected on my tax returns...). As I mentioned, I received
no distribution forms or 1099s of any sort...

Am I liable for taxes on the recharacterization even though
it was not my fault? Should I request recharacterization
BACK into a Traditional IRA? (and if so, what are the tax
implications of that?) What if I leave it as a ROTH IRA? Do
I need to file any amendments to my TY2002 taxes in any of
these cases?

Thanks in advance,

--
Mike Hirabayashi
JLS Language Corporation

+1 (650) 321-9832
http://www.jls.com

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