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Accidentally sold stocks - capital gains

3,286 Views | 11 Replies | Last: 2 yr ago by lb3
River Bass
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Here is what happened:

I rolled over retirement funds from an old 401k account to another brokerage firm in order to consolidate my accounts.

These dollars automatically went into a money market fund.

I tried to log onto the website of the new account to exchange the dollars into an actual investment (target fund) but the brokerage website was down so I called them thinking I would handle this the old fashioned way.

When attempting to handle this on the phone, the agent exchanged the wrong dollars (old investments in a non-retirement account) into the target fund rather than the retirement fund dollars that I had just transferred.

I saw the mistake less than 24 hours later once the firms website was back online.

The non-retirement investments had significant gains over the years and I may be looking at the largest tax bill that I've ever had unless I can figure out a way to reverse this.

What can I do? Should I insist that broker classify this as an error to avoid capital gains? Should I call the IRS and explain the situation?
DeLaHonta
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AG
I don't think the IRS has any "oopsie" exceptions. Your only option is to try and get your brokerage to do something on their end to where it won't show on the 1099, but I don't know if that's really possible for them. Honestly, you're probably hosed.
RockOn
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Get them to write you a check for the capital gains tax they inflicted on you.
TexAg2k8
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AG
Call them and report the error. They will pull the recording of the phone call and if the rep made an error they should reverse the trade and make you whole.
FattyDelights
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Ugh - capital gains - you take all the risk and the gov gets a free ride.
SMM48
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AG
Easy fix.

Calll them.

Pull the recording.

If they made the error they will do a trade correction as if it never happened. They actually will do two trade corrections. One for the wrong account and one for the new account.
ebdb_bnb
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It wouldn't be a correction in the qualified account since a trade didn't occur. It would be an "as of" trade if he is worse off.
mosdefn14
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AG
They should be able to bust the trade. Trades are frequently placed in wrong accounts (12345 gets fat fingered as 12346 etc).

Bigger question is why roll over into an IRA just to buy a target date fund, but I'll let that one pass.

ETA: How much cap gains are we talking, and what's your tax rate? Were they investments you wanted to hold, or just held bc you didn't want to pay taxes? One might feel taxes are higher next year, and want to reset their cap gains exposure and get a fresh start. Just an idea.
River Bass
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Update: The brokerage firm is correcting the mistake.
Thanks for all the advice.
SMM48
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AG
Trade correction is general overall term. A trade correction must be done even in an as of case. Someone will be eating the mistake. In this case either the agent on the phone or the company themself.

In other words. The lack of a transaction still requires a trade correction to fix it. It just doesn't happen for free. The error is coming out of someone's pocket.
ebdb_bnb
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FunkyKO said:

Trade correction is general overall term. A trade correction must be done even in an as of case. Someone will be eating the mistake. In this case either the agent on the phone or the company themself.

In other words. The lack of a transaction still requires a trade correction to fix it. It just doesn't happen for free. The error is coming out of someone's pocket.



The term is often misused. You can't correct something that didn't occur. The cost of doing so really has nothing to do with it and obv someone other than the client is responsible for it.
SMM48
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AG
The industry terminology is a trade correction. Even in the event of a lack of a trade. A correction must be made. Fail to enter.
lb3
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AG
DeLaHonta said:

I don't think the IRS has any "oopsie" exceptions. Your only option is to try and get your brokerage to do something on their end to where it won't show on the 1099, but I don't know if that's really possible for them. Honestly, you're probably hosed.
Lean on the broker to undo their error. Otherwise let the IRS sue you. No jury I'm on would ever convict for for a 24 hour oopsie by your broker.
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