IRA check not deposited in time

[pantsonfire]

What is the name of your state? Kansas

On April 11, 2006, I met w/my "wealth manager" and personally gave him a check to fund my & my husband's 2005 IRAs. I just found out (in June) that he FORGOT to deposit my check, due to illness etc. in his family.

I am flabbergasted. This is a very large, well known company. They have said they cannot credit it to the 2005 tax year because they don't have a time/date stamp. If I had mailed it instead of trusting a representative of their company to personally handle the check, I would be "OK". They have not suggested any compensation is due, but are awaiting my instructions on what to do with the uncashed check.

All I can see is an amended return, tax, penalty, interest, preparation fees and the loss of investment income on that amount for a lifetime.

Any suggestions - besides the obvious of finding a new investment manager?? Has this happened to anyone before??

Thanks.

 

[moburkes]

What is the name of your state? Kansas

On April 11, 2006, I met w/my "wealth manager" and personally gave him a check to fund my & my husband's 2005 IRAs. I just found out (in June) that he FORGOT to deposit my check, due to illness etc. in his family.

I am flabbergasted. This is a very large, well known company. They have said they cannot credit it to the 2005 tax year because they don't have a time/date stamp. If I had mailed it instead of trusting a representative of their company to personally handle the check, I would be "OK". They have not suggested any compensation is due, but are awaiting my instructions on what to do with the uncashed check.

All I can see is an amended return, tax, penalty, interest, preparation fees and the loss of investment income on that amount for a lifetime.

Any suggestions - besides the obvious of finding a new investment manager?? Has this happened to anyone before??

Thanks.

When did you notice that the check did not clear?

 

[pantsonfire]

well....

I'm ashamed to admit that I did not notice the extra money in my account until he called last week.

 

[tranquility]

I don't think you will get the IRA deduction. You could try and argue with the company to say they had the money on time, but you will get a huge fight and the attorney fees will more than make up for any benefit you could have gotten from the deposit.

However, the planner did commit some sort of tort (Misrepresentation? Negligence?) and you might be able to get an attorney for that. One problem is that you probably signed an arbitration clause when you opened the account with the planner. This makes it harder as damages tend to be very limited when dealing with an arbitrator with knowledge of the industry.

What are your damages?

That's were the argument lies.

 

[LdiJ]

What is the name of your state? Kansas

On April 11, 2006, I met w/my "wealth manager" and personally gave him a check to fund my & my husband's 2005 IRAs. I just found out (in June) that he FORGOT to deposit my check, due to illness etc. in his family.

I am flabbergasted. This is a very large, well known company. They have said they cannot credit it to the 2005 tax year because they don't have a time/date stamp. If I had mailed it instead of trusting a representative of their company to personally handle the check, I would be "OK". They have not suggested any compensation is due, but are awaiting my instructions on what to do with the uncashed check.

All I can see is an amended return, tax, penalty, interest, preparation fees and the loss of investment income on that amount for a lifetime.

Any suggestions - besides the obvious of finding a new investment manager?? Has this happened to anyone before??

Thanks.

Accept the fact that you are going to have to amend your return to remove the IRA deduction.

The interest and penalties won't be dramatic if you do it quickly. Its always better if you admit your "mistake" first. Remember, as far as the IRS is concerned its your error.

You don't have to lose the investment income for a lifetime, there are other ways to invest that money. Make another investment.

Yes, absolutely get a new investment manager. Even if that manager had a personal emergency there should have been someone else making sure that his items were handled....and yes, they really should have been offering you some kind of compensation.
They should at least be willing to provide you documentation to prove to the IRS that it was their error to hopefully get the interest and penalties waived, and if not, to offer to reimburse you for those.

However...this is small claims at best and your contractual agreement may not allow you to take it to small claims.

In the future, don't wait until the last minute to make your IRA contribution.

 

[Snipes5]

I'm not sure why this would require an attorney. Amend your tax return so you don't have issues with the IRS. Attach a statement asking them to abate any penalty, explaining what happened.

Inform the brokerage/investment company that THEY are responsible for any financial costs incurred by you which resulted from the actions of one of their employees. Surely they have insurance against this sort of thing...

If they are not forthcoming, perhaps you could inform the State Board that licenses your "wealth manager".

In any event, do a little more legwork before you spend $$$ on an attorney.

Snipes