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© SEI 2022 For Intermediary Use Only. Do Not Distribute. 15 If an IRA owner violates the SEPP schedule, any 1099R's using code 2 need their distribution code updated to report as Code 1, early distribution no exception. If your client needs the 1099R to report a distribution as code 2, or if you need to update your investor's 1099R for a SEPP violation, please contact SPTC. E. The IRA owner took a 'Coronavirus Related Distribution' in 2020 as part of the CARES Act. How can they re-pay the distribution? If an IRA owner is a 'qualifying individual' per the provisions of the CARES act and took a 'Coronavirus Related Distribution' (CRD) in 2020, they have the option to repay that distribution over a 3-year period. The distribution must be repaid within 3 calendar years, starting from when the client received the distribution. Since the distribution exception was only offered in 2020, 2023 will be the last year to repay the distribution. If the IRA owner wants to re-pay this distribution, they can send a check to SPTC with a signed Additional Investment Form indicating the receipt coding as a Coronavirus Related Distribution' re- contribution. The IRA Owner should work with their tax preparer to make sure they properly claim any penalty exemptions and tax exemptions from performing this action. F. How are postponed/late contributions reported? If the IRA owner was an 'affected tax payer' in a federally declared disaster area and performed a postponed/late 2021 prior year IRA contribution in 2022, prior to the IRS's IRA contribution deadline extension, this postponed/late contribution will be reported on the 2023 5498 in box 13a. Investors should work with their tax preparer on how to report these postponed/late IRA contributions properly. 10. Additional questions on tax forms A. Why are there differences in the income reported on the Tax Information Summary and my client's December 31 Statement of Value and Activity? Differences exist because of account activities that occur after the issuance of the "December 31 Statements of Value and Activity" but that are reportable to the IRS for the preceding tax year. Examples of activity that would cause these differences are: Tax forms report transactions by tax year, not calendar year. Therefore, dividends posted early in January are often taxable for the prior tax year. The statement will report based on what calendar year they are posted in so January dividends RIC (Registered Investment Company) income that is payable in the current year with a record date in the previous year. Income Re-allocations and return-of-capital adjustments, applicable for the preceding tax year, made after the issuance of the December 31 Statements of Value and Activity. The account holds WHFIT assets where items of gross income, including certain trust expenses, will now be included with income. Tax liability may be based on an amount greater than the cash received. Statements include the following language to address this: "This summary is for your reference. It is not intended for tax-reporting purposes. Taxable income is taxable at the federal level and may be taxable at the state level. Gains may or may not be taxable based on the account type." B. What is the difference between a Capital Gain and a Capital Gain Distribution? Capital Gains occur when a security is sold for more than its cost basis, or from certain corporate actions that may recognize a gain. If the security was held for 1 year or less, the gain is considered short term. And if the security was held for longer than 1 year, the gain is considered long term. Capital gains are reported on the 1099B. For covered securities, the gain is represented as the difference between the proceeds in box 1d and the cost basis in box 1e. Short term and long term capital gains are taxed at different rates.

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