I was reminded yesterday that one should always check the forms that come in with income, etc.at the year end to help you prepare your income taxes. I am sure you understand what I mean all the W2, assorted 1099s maybe some K1 forms... NEVER ASSUME THAT EVERYTHING IS OKAY UNTIL YOU CHECK THE NUMBERS!
I thought that I was doing well, doing as I always do. I use a bookkeeping program all year, so all I have to do is compare the totals for the year as I always do - well maybe. Husband has an IRA at each of 2 credit unions. (Credit unions function like banks, but the depositors own it. Originally they were “affinity” organizations - one had to work for a certain type of company or live in a certain area to “join”; they are now allowed to have people joined who are not members of a limited group.) We have been making withdrawals as we need to supplement our other income from one of the two credit unions - we like the other one better and the other one has slightly better interest rates. Last year, however I noticed that the IRA money in the other as his account had gone over the insured amount, so we took money from it once last year. I keep on eye on what we might need and will have husband transfer money from a CD (fixed time saving certificate of deposit) in the IRA into a savings account in the IRA so that we always have some money not in a CD that we can go in and make a withdrawal from that account - we do this as if we withdrew money from a CD not when it renews there would be a bank penalty.
To protect the (not really) “innocent” I will refer to the credit union that we have been withdrawing from over the years as “Union A” and the other one - the one we like and just started withdrawing from - as Union B or none of this will make sense.
For those of you not in the US - Individual Retirement Accounts (IRAs) are so that people who work and do not have a pension at work can set aside money for retirement. I will not go into all of the details of same as you will all have headaches if I do - but basically one must be 59.5 years old or older to take out money without an IRA penalty and one pays income taxes on the money one withdraws. The IRA can also be used if one had a pension and leaves work by one having the pension money transferred (rolled over) into a IRA (at bank, credit union. stock broker and a variety of other financial institutions). In our case, husband’s IRAs are the rollover of his pension when he quit his job. (This is not something called a Roth IRA - which I will not go into explaining as it has no relation to any of this.)
As an accountant I consider myself good at keeping track of our money. Every bank statement is timely reconciled - including those for the IRAs. I also have a (very) small IRA at Union B as I had no pension.
When the year end forms showing the income (withdrawals from) from husband’s IRA at Union
A arrived, I looked at the amount of income (withdrawals) it showed for the year and compared it to the total in my bookkeeping software and it matched. Remember, through 2017 we had only made withdrawals from the Union A IRA.
Well, yesterday the paperwork arrived from Union B and I went to check it against the total in my bookkeeping software and I realized something was wrong - MAJOR WRONG. The Union B form showed that he (we) had withdrawn three times as much as I showed we did. Then I remembered that the entire amount withdrawn on my software was the same as what was withdrawn from Union A. I pulled out the year end Union A paperwork to figure it out.
Remember I said that we transfer money within the IRA at Union A and also within the IRA at Union B (each credit union separately - not between the two IRAs)? Somehow both credit unions had made a mistake in a transfer within the IRA at that credit union. The paperwork from Union A had looked right as the amount transferred within same (from CD to savings account) happened to be equal to the withdrawal we made at Union B. The form from Union A actually showed several thousand dollars more than we had actually withdrawn.
At Union B we had gone in and taken money during the year (as I said, just happened to be the same amount as the transfer at Union A) and at the same time - on separate paperwork - we had transferred money within that IRA into the IRA savings account at that credit union. So - it was by chance that the paperwork from Union A looked correct when it was not. At Union B we had transferred twice as much as we had withdrawn - hence, since the same sort of error was made there - the paperwork showed that we had withdrawn 3 times as much as we did.
So today - after a quick “fun” stop at the doctor for followup blood test - we drove to Union A. We went there first as in general they don’t always seem to know what they are doing and there was no paperwork for the transfer there - only a withdrawal and deposit slip. As we thought about it and looked at the paperwork I did have, we remembered the problems the day we transferred (or thought we transferred) the money. We had gone to the branch of Union A we normally go to - a small branch closer to us than the main branch. There has been a very nice and competent employee there that would we wait for. She was not there. The fellow who was there did not have any idea what he was doing and we left and went to the main branch. In the main branch they were having a “summer beach party” theme event (banking is not suppose to be fun - it is business). I did not have a business card from the employee - who seemed competent at the time - and had written his name down as he did not have one. I remembered when thinking about it that it had all seemed too quick.
When we went in today I asked for a manager or supervisor and was questioned at the reception desk as to why I needed one and told that any of the employees can do that - I told the woman at the desk, we preferred to deal with a manager to do this. An employee came out - based on where she had come from I knew she was not a manager. When we shook hands I asked what kind of manager she was - she was not and I repeated my request, which again, she tried to talk me out of. We eventually met with the assistant manager. Luckily she understood and she was able to correct the error. We are to get new paperwork - both the required paperwork for our income taxes showing the amount he received for the year and we also requested a new “summary statement” as we will need that later in year to apply for the real estate senior deduction (the one seemed not to have arrived at the township back in December). Hopefully we will have correct copies of both in about a week.
Oh, this manager said something that no one should every say about their business to a customer. I had told her that we have not been happy with the credit union in general -“Really? How come you have not moved your account elsewhere then?” Instead of “I am so sorry to hear that - what can we do to make it better for you?” (Which husband basically told her - employees need better training in IRAs and don’t have event parties.”) She basically suggested to us that we should not bank with her credit union and we should move our money elsewhere!
We then drove to Union B. I was not as concerned about dealing with the problem at same as the employee ( a very good one that we ask for when we go in) had filled in the form to have this processed correctly - it just had not been done correctly by whoever processed it. What a difference! We asked to speak to a manager. Other than being offered someone else to help as the manager was with a customer, there was no question about us speaking with her. When we speaking she commented (in reference to something said) “Some customers just like to stop in and say hello to me.”
She corrected the error - and apologized it for it. She could not get us a replacement summary statement for the year. She came up with an idea and printed out each account for the year, stamped it with the bank’s rubber stamp and signed it as an alternative. So much more pleasant and not at all adversarial as the other credit union had been!
Hopefully this all is resolved now other than our receiving the amended forms. I have now decided that whatever is going on and making us redo things a second time is some sort of curse and I don’t know where it came from or how to get rid of it.
THOUGHT FOR THE WEEK -
When you get financial papers - make sure they are correct. Always reconcile statements. Do the math to make sure that those W2, 1099, etc forms to prepare your tax returns are correct - do the math. We have not had a problem before - but this year we had two problems from 2 separate sources.
Check things when you receive them. Some banks will not correct statement errors after the month you receive the statement. In this case if I had put these papers aside until I was ready to do our taxes - instead of checking right away - in addition to being concerned about getting them corrected, I might be facing a tight deadline to get them corrected to file our return. Keep the assorted slips and papers you receive when making a deposit, transfer or withdrawal. The more paperwork you have to back up your side if there is a problem - the better off you are - even if you scan the papers into the computer to keep them there.
Start now keeping things organized for your 2019 taxes due in April 2020. No - really - start now as papers come in. I have a folder in my paid bills accordion holder marked “1099s”. Anything I receive during the year that is a form like this I toss in this folder. I also have folders for our car and our van (both are partially business expenses) - I put receipts for cash paid for either, plus the invoices from the mechanic, etc for either, in the appropriate folder. There is also an “accounting” folder for receipts for cash paid for same also - including receipts for parking and for subway fares when I go to clients. At the end of the year all these folders - except the “1099" are pulled out and put in a holder I have for clients (and us) that holds the papers for taxes. This lets me start putting in the new year’s receipts (took out 2018 papers, now can use for 2019 papers). The “1099" folder still holds items for 2018 right now as they are coming in the mail and it is extremely rare to receive any of these forms for the current year this early in the year.
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