Did you get any kind of confirmation number or anything when they approved it? I just submitted my request and realized I forgot to ask for some kind of reference number.

This is really helpful, thanks! Is there a difference in success rates between calling vs writing a letter for the FTA request?

In my experience, calling is generally faster if you can actually get through to someone. You'll often get an immediate decision during the call. The agent can check your compliance history on the spot and approve the FTA right then. Letters take much longer due to IRS processing backlogs - sometimes 8-12 weeks or more. However, the success rate is probably about the same either way. The FTA criteria are pretty straightforward, and if you qualify, you should get approved regardless of which method you use. One advantage of writing is that you have documentation of exactly what you requested. If you call, make sure to take detailed notes of who you spoke with, when, and what they said.

Thanks for the detailed info! My decree does require my ex to provide quarterly statements, but doesn't say anything about tax benefits. Are there any other implications I should be aware of if I open my own separate 529? Like, does it matter which account gets used first when my son goes to college?

There's no rule about which 529 account gets used first when your son attends college. Typically, you'd want to coordinate with your ex about this when the time comes. Some divorced parents agree to each pay a certain percentage of expenses, while others might agree to deplete one account before starting on the other. As for other implications, remember that having your own account gives you complete control over your contributions. If your ex were to use the funds inappropriately or change the beneficiary, you'd have no recourse with her account. With your own account, you maintain full control over your portion of the college savings.

You can't directly transfer money from your ex's 529 to your new one unless your ex initiates it as the account owner. It would count as a withdrawal from their account and a new contribution to yours. Instead, just leave the existing money where it is and start making your new contributions to your own account.

That makes sense, thanks! Guess I'll leave the old funds where they are and just start fresh with my own account. Seems like the cleanest approach without having to get my ex involved more than necessary.

Thanks for bringing this up - I hadn't even considered redemption timing issues. Is there any exception if the redemption is very small compared to the total outstanding shares? For example, if they bought back 2% of shares from a departing employee?

There is a de minimis exception for redemptions, but it's very limited. The exception only applies if the total value of stock redeemed within the relevant period doesn't exceed $10,000 OR 2% of the value of all outstanding stock at the beginning of the period. So for most businesses of meaningful size, that 2% threshold is really tiny. The safest approach is to ensure no redemptions have occurred in the look-back period. If there have been redemptions, you'll need to carefully analyze whether they fall within the de minimis exception or whether there's a qualifying exception for death, disability, or divorce (there are specific carve-outs for these situations).

Yes, this is a real concern! One way around this is to establish a separate entity for your excess cash/investments. The "active business" test requires that at least 80% of assets be used in the active conduct of a qualified business. If your cash reserves are getting too large, you could dividend out excess cash to yourself and then invest personally, or create a separate investment entity that wouldn't affect your QSBS-eligible company.

Thanks for the advice! I didn't itemize - I took the standard deduction. Would that have made a difference with how the gambling income was handled? I'm definitely saving everything from TurboTax, including recording our phone conversations (with their knowledge).

Yes, that makes a significant difference. Gambling losses can only be deducted if you itemize deductions, and even then, they're limited to the amount of your gambling winnings. Since you took the standard deduction, you couldn't deduct those losses at all, which means your AGI should definitely have included all the gambling winnings. This actually makes TurboTax's error even more clear-cut. They should have included all gambling winnings in your AGI calculation regardless of your losses or deduction choice. Definitely consult with a tax attorney - this is a textbook case of preparer error.

Did H&R Block end up covering any of your penalties or offering any compensation for their mistake? I'm dealing with something similar right now.

Banks are required by law to keep those records! Ask to speak to a supervisor in their tax document department, not just a regular customer service rep. If they still refuse, remind them that per IRS regulations they MUST provide you with copies of tax documents for at least 3 years. If all else fails, you can try filing Form 4506-T with the IRS to get wage and income transcripts that might show the IRA contributions even if you don't have the bank's forms. I had to do this when my credit union "lost" my 5498 records during a system update.

Thanks for this advice! I called again today and specifically asked for the tax document department instead of regular customer service. They still gave me trouble but when I mentioned the IRS regulations about maintaining records, their tone changed completely. They're sending me copies of all my 5498 forms from the last 4 years. I had no idea about Form 4506-T either, that's super helpful as a backup option. I'm starting to feel like we need a complete guide for dealing with banks that "lose" or mess up IRA contribution records!

This is really important info, thank you! Our letter arrived yesterday, so I'm guessing our 90-day clock is already ticking. Should we hire a tax attorney to help with the Tax Court petition if we can't get this resolved quickly? I'm worried about messing up the paperwork and losing our right to challenge this.