March 4, 1994
TO: OPERATIONS MEMBERS NO. 7-94
PENSION MEMBERS NO. 6-94
TRANSFER AGENT ADVISORY COMMITTEE NO. 8-94
RE: INTERNAL REVENUE SERVICE CLARIFIES RULES FOR REPORTING
DIRECT ROLLOVERS
__________________________________________________________
As we previously reported, IRS Announcement 93-20 clarified that, except
in the case of a direct rollover for a spouse due to the death of a
participant, no other codes needed to be used with codes G and H, the codes
used to report direct rollovers on IRS Form 1099-R. (See Institute Memorandum
to Pension Members No. 8-93, Operations Members No. 9-93 and Transfer Agent
Advisory Committee No. 10-93, dated January 26, 1993.) Revenue Procedure 93-
31, however, indicated that codes G and H cannot be accepted with numerical
codes (other than code G with numerical code 4). (See Institute Memorandum to
Accounting/Treasurers Committee No. 25-93, Closed-end Fund Members No. 22-93,
Operations Members No. 28-93, Pension Members No. 29-93, Tax Members No. 29-
93, Transfer Agent Advisory Committee No. 41-93 and Unit Investment Trust
Committee No. 33-93, dated August 13, 1993.)
Attached is a copy of IRS Announcement 94-40, which indicates that many
companies have programmed their reporting systems to include other numerical
codes with codes G and H, based on the earlier announcement. The IRS
accordingly has reprogrammed its Form 1099-R processing system to accept codes
1, 2, 3, 4, or 7 with codes G and H, but only until December 31, 1994. For
any report after December 31, 1994, a 1993 (or later) Form 1099-R with a code
G and a numerical code other than 4, or a code H and any numerical code, will
be treated as an erroneous filing.
We will keep you informed of developments.
Kathy D. Ireland
Associate Counsel - Pension
Attachment