This is exactly the kind of situation where you need to be extremely persistent and methodical. I went through something similar with my father's 403b account that was liquidated by Vanguard without proper notice. Here's what I'd recommend doing immediately: 1. Send a certified letter to Merrill Lynch demanding ALL records related to the account closure - including internal notes, address verification attempts, dates of all communications, and proof of delivery for any mail they claim to have sent. 2. File complaints with multiple agencies simultaneously: FINRA, CFPB, your state's Attorney General consumer protection division, and the Department of Labor (since this appears to be an ERISA plan). 3. Contact your mom's former employer's HR department - they may have records of the proper procedures that should have been followed and can put pressure on Merrill Lynch as the plan sponsor. 4. Document the financial impact: calculate not just the taxes and penalties, but also the lost retirement savings and any other costs (accounting fees, time off work, etc.). The key is creating a paper trail that shows Merrill Lynch failed to follow proper procedures. In my dad's case, we discovered they had only attempted to contact him through regular mail to an old address, despite having his updated contact information on file. Once we proved this pattern of negligence, they reversed the entire distribution. Don't let them brush this off - retirement accounts have special protections precisely because of situations like this.

I'm so sorry your mom is going through this nightmare situation. As someone who works in retirement plan administration, I can tell you that what Merrill Lynch did raises some serious red flags from a compliance perspective. Here's what I'd add to the excellent advice already given: Request a complete "administrative record" from Merrill Lynch. This should include not just the letters they claim to have sent, but their internal procedures manual for handling address verification issues, the specific dates when each action was taken, who authorized the distribution, and what alternative contact methods they attempted (phone calls, email, etc.). Most importantly, ask them to provide documentation showing they followed their own written procedures. Financial institutions are required to have documented processes for these situations, and if they deviated from their own policies, that's a major compliance violation. Also consider reaching out to your state's insurance commissioner's office if your mom's 401k had any insurance components, as they sometimes have jurisdiction over certain retirement plan issues that other agencies don't cover. The fact that she never received the actual distribution check is huge - that suggests the funds are likely sitting in a suspense account somewhere, which makes reversing this much more feasible than if the money had actually been cashed and spent. Don't give up! These situations can absolutely be resolved when you know which pressure points to apply.

Has anyone considered the potential gift tax implications here? If the interest rate you're charging is below market rates, the IRS could view the difference as a gift subject to gift tax. Though at 10% that's probably not an issue in this case.

One thing I haven't seen mentioned yet is the passive activity loss rules. Since you're essentially operating as a lender for profit, you need to consider whether this qualifies as a passive activity under IRC Section 469. If the IRS classifies your lending activity as passive, it could limit your ability to deduct the interest expense against other types of income. The key factor is whether you're "materially participating" in the lending activity. For a single loan like this, you probably won't meet the material participation tests, which means any net loss from the activity (your $8,125 interest expense minus your $12,500 interest income) would be subject to passive activity limitations. In your case, since you're making a profit ($4,375 net), this shouldn't be an issue. But it's worth understanding these rules in case you expand into more lending activities or if your interest rates change. You might want to consult with a tax professional who specializes in investment activities to make sure you're structuring this correctly from the start.

I totally feel for you - that waiting period after seeing the 846 code is so stressful, especially when you have medical bills piling up! 😔 From everything shared here, it really sounds like you're tracking normally for an amended return. The combination of your 846 code dated 11/5 and WMAR finally showing "adjusted" is actually great news - it means all the processing hurdles are cleared and your check was likely mailed right around that date. Since today is around 11/10, you're still in that typical 5-7 business day USPS delivery window everyone mentioned. I know it's torture waiting when you desperately need the money, but amended returns pretty much always come as paper checks regardless of your banking info. Definitely sign up for USPS Informed Delivery if you haven't - it'll at least give you a morning preview of what's coming so you're not anxiously checking the mailbox all day. And watch for a super plain white Treasury envelope that honestly looks like it could be junk mail! Try to hang in there until around 11/15 before panicking. Your refund is definitely approved and on its way - just moving at typical government speed! 🤞

I can definitely understand your anxiety - waiting for a refund when you have medical bills is incredibly stressful! 😰 Based on what everyone has shared here and the timeline you've described, it really does sound like you're still within the normal delivery window. Your 846 code dated 11/5 combined with WMAR showing "adjusted" is actually exactly what you want to see - it confirms your refund was fully approved and the check was likely mailed right around that date. Since it's now around 11/10, you're still in that typical 5-7 business day USPS delivery timeframe that others have mentioned for amended return checks. I know it's so hard not to worry when you really need that money, but try to hang in there for a few more days before escalating. One thing that might help ease some of the daily anxiety is setting up USPS Informed Delivery if you haven't already - it'll give you a preview each morning of what's coming in your mail. Also keep an eye out for a very plain white Treasury envelope that honestly doesn't look official at all - many people almost miss them thinking they're junk mail! Your refund is definitely approved and on its way - just moving at government speed! 🤞

One thing nobody's mentioned - if you haven't filed your 2023 taxes yet, you might want to request an extension to give yourself time to make sure everything is reported correctly. The 1031 reporting on Form 8824 can be pretty complicated when you have boot involved.

I'd strongly recommend getting a second opinion from a tax professional who specializes in 1031 exchanges before filing. While everyone here is correct that the boot is generally taxable in the year of sale, there can be some nuances depending on exactly how your exchange was structured. For example, if there were any complications with the original sale (like delayed closings or escrow issues) or if your QI agreement had specific language about when funds are considered "received," it might affect the timing. I've seen cases where the technical details of the exchange documents made a difference in how the IRS viewed the transaction. Given the significant tax bracket difference you mentioned between 2023 and 2024, it's worth investing in professional advice to make sure you're not missing any legitimate planning opportunities. A qualified tax attorney or CPA with 1031 experience should be able to review your specific documentation and confirm the proper reporting year.

As someone who's navigated similar compensation challenges, I'd suggest one additional strategy that's worked well for me: creating a "business case presentation" for your employee's compensation adjustment. Instead of just submitting requests through normal HR channels, prepare a formal presentation that you can deliver to key decision-makers. Include slides showing market data, ROI calculations from their contributions, risk analysis of losing them to competitors, and proposed compensation scenarios. I've found that when you present compensation adjustments as business decisions rather than employee requests, executives tend to be more receptive. Frame it as "retaining critical talent" and "preventing costly turnover" rather than "giving someone a raise." Schedule time with your VP or whoever has budget authority and present it like any other business proposal. Include cost-benefit analysis showing how much it would cost to replace this person (recruiting fees, training time, productivity loss, etc.) versus the cost of properly compensating them now. This approach has helped me secure out-of-cycle adjustments that seemed impossible through normal HR processes. It positions you as a strategic leader protecting company assets rather than just an advocate for your team member.

Just wanted to add another perspective as someone who went through a similar situation last year. After reading through all these great responses, I think you're absolutely making the right call to abandon the personal gift idea. One thing that really helped in my case was getting my employee involved in building their own compensation case. I worked with them to create a "career development plan" that included market research they conducted themselves, a portfolio of their achievements, and specific goals for the next 6-12 months. When we presented this to HR together, it showed that this wasn't just me advocating for someone, but a strategic employee who understood their own value and was committed to continued growth. HR was much more receptive to the request when they could see the employee had done their homework and wasn't just expecting a handout. The collaborative approach also helped my employee feel empowered rather than like they were dependent on my advocacy. They ended up getting a 20% salary adjustment and a promotion timeline that neither of us thought was possible through the normal channels. Sometimes the best way to help someone is to help them help themselves, especially when it comes to career advancement and compensation negotiations.