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Is anyone a tax adviser/tax attorney who would give me free advice?

Ok, I’m at the end of my rope on this, so I’m going to beg. This is me begging. Is anyone out there a tax adviser or tax attorney who can give me free advice? Last year I rolled over a 401K into a traditional IRA. This year my old employer sent me a letter saying that they can’t do math correctly and they rolled over an extra couple thousand dollars because of a vesting error, which they’d like back now. I have talked to several people, from my IRA custodian, Marketplace Money, a free legal-aid pension lawyer, and even the IRS. Yes, I voluntarily called the IRS. That is how crazy this shit has made me. I have Googled and researched and asked for help and wasted at least 8-10 hours of my life trying to figure this mess out, but I still have no fucking clue how to remove this money from the account with little or no penalties or excess fees. Can anyone help me on this? Please, Dear God. The end of the tax year is coming up and I need to do what ever I’m going to do NOW.

I do understand that time and expertise are worth money, since that is how I make a living as a freelancer. So, part of me knows it is hypocritical to ask for free advice about this. However, since it was in no way my fault that this incident happened, I don’t think I should have to pay for my old employer’s mistake. Please take mercy me. Please, please, please. Thank you.

Update: Thank you, everyone! Your comments have helped a lot and I think I know how to resolve this issue now. Thank you for being the best blog readers ever!

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16 Comments

kazari • December 20, 2010 at 4:13 pm

I’m not a tax adviser, or even an American citizen.
But, if it’s impossible to pull the money out without fees, and it’s the other company’s fault – suggest you’ll give the money back, minus the fees.
That way you won’t be the one out of pocket.

They may say no, but at least you tried

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PastaQueen • December 20, 2010 at 4:28 pm

@kazari – That is a perfectly reasonable suggestion, but the idea of having to call those morons one more time and be shuttled around their phone tree only to get a non-informative answer seriously makes me want to cry. Like, actually, physically cry, right here at my desk.

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LoriV. • December 20, 2010 at 4:28 pm

The letter of explanation needs to go the company that processed the rollover. They’ll need to recalculate the amount of the rollover and send a letter to company that holds the current IRA. They should then pull the funds out of the IRA along with any interest without penalty to you. You should be issued a a new 1099-R for the year of the rollover and there should not be any fees or penalties to you. Basically there was ineligible funds in the account and the funds companies need to make the recalculations. The IRA company sends the funds back to the 401(k) company who sends them back to your former employer.

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PastaQueen • December 20, 2010 at 4:36 pm

@LoriV. – Ok, this sounds like exactly what I did in November. I sent a letter to my IRA company. The old 401K place sent a letter to the IRA company. But then my IRA company sent me an “IRA and ESA Excess Contribution Removal Form” which has totally confused me since I don’t think this is an excess contribution. So, do I need to call the IRA company again and re-explain the situation and confirm that they got the letter? And do I need to do this before the end of the tax year to avoid extra fees or not? Thank you so much!

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Mary • December 20, 2010 at 4:46 pm

Hello – I work in Customer service for a investment company and have worked for quite a few over the last 5 years. Sounds like this was a vesting error which needs to be corrected by the original transfer company which is your 401k, this may have to come from your original employer – go through your 401k investment company and they will send it to the current company. Basically the letter will say “We made an error in our vesting and X amount was actually not vested – these funds do not belong to the client and need to be returned” then they will list where to send the check and how to make it payable. Have it signed by the authorized signer of your 401k (this is the person who signs off on everything for the 401k plan and makes all the decisions) This should work or at least get you started – the current IRA holder may ask for a couple additional docs or this may be enough. Good luck :) You may also want to consider a 3 way call between your current holder and old 401(k) holder – dont let them hang up until somebody comes up with an answer or offers to research it. This process shouldnt take more than a couple weeks MAX so followup often.

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Tricia • December 20, 2010 at 4:49 pm

Sorry that I’m not a tax advisor . . .

Here is what I would do. If the amount I owed was small enough, I would pay them back out of my savings and just contribute less to my retirement plans next year. If the amount was too big to do that, I would call and beg for a payment plan, so that I could make payments next year instead of contributing to my retirement plan. If that didn’t work, I would see if I had any roth IRAs that are over 5 years old so that I could take penalty free withdrawals from there. I would also comfort myself with the fact that I have been happily earning interest on their money this whole time.

Good luck!

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Tami • December 20, 2010 at 5:45 pm

we have retired tax people that come to our library around tax season and give free advice…I can’t think of the name of the organization they are part of…

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Leigh • December 20, 2010 at 6:29 pm

– the organization is VITA. They can only help with very simple questions. Jennette, I am not sure but I think professional advice from a CPA is tax deductible against your return. I use a CPA every year, taxes make me hysterical and I can’t handle them. This isn’t the advice you want but CPA’s are well worth what they cost. Wish I was a CPA, I’d gladly offer you free advice, you have been such an inspiration to me.

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adrienne • December 20, 2010 at 7:28 pm

Taxgirl from taxgirl.com was one of the best presenters I saw at Blogger.

She’s a benevolent tax attorney who explains mysterious things well to the rest of us.

@taxgirl on Twitter

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Elizabeth • December 20, 2010 at 7:55 pm

Hey Jeannette,

I talked to my mom, who’s a CPA, who told me your problem is solve-able. Something something about telling your IRA company to “roll the money back”? She used fancy CPA words (I was a history major). ANYWAY, I eventually sounded confused enough that she offered to talk to you via email, so if none of the above options work out for you, give me a shout and I’m happy to hook you up. She’s one of those southern moms who is always trying to feed my friends (and do their taxes), PLUS she loves your blog.

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Elizabeth • December 20, 2010 at 7:56 pm

aaaaand I mean Jennette. My bad. :-/

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RG • December 20, 2010 at 8:27 pm

I am also not a tax advisor but I work with a lot of CPAs and work in the financial industry. I think Mary’s suggestion is spot on – the original company needs to contact the rolled-over-to company and admit their error. Both companies should report this vesting error to the IRS directly. I don’t see any reason it has to happen by the end of the year. I’m also not sure if you have to do a tax adjustment; assuming you took the deduction of the proper amount when it was put into the 401K, it doesn’t matter what it was worth when you rolled it into the IRA; since you didn’t roll it into a Roth I’m guessing you didn’t change the tax-deductible portion so the entire amount is basis.

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Merry • December 20, 2010 at 10:00 pm

My best advice would be to hide under the bed until the whole mess goes away, so I’m glad you have much more tax-savvy commenters who give sage advice.
I can offer sympathy, would that help?

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Sandy • December 21, 2010 at 7:11 am

@Merry – Best comment of the bunch – had to chuckle, thanks.

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BridgetJones • December 21, 2010 at 11:54 am

I like RG’s suggestion the best. I have no experience with finances, but it just sounds so easy and clear…it must be the right thing to do.

Don’t let them steal your holiday happiness. Have a great one, okay?

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Jackie • December 21, 2010 at 2:11 pm

@RG – My husband said to do the exact same things that you suggested!

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Comments are now closed on all PastaQueen entries. The blog is an archive only so I don't have to deal with spammers. For fresh discussions please visit my new blog at JennetteFulda.com.

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Jennette Fulda tells stories to the Internet about her life as a smartass, writer, weight-loss inspiration, chronic headache sufferer, and overall nice person (who is silently judging you). She does this at JenFul now, but you can still have fun perusing her past here.

Disclaimer: I am not responsible for keyboards ruined by coffee spit-takes or forehead wrinkles caused by deep thought.

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