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Old 03-27-2014, 12:33 PM
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Need assistance - Roth/Traditional rollovers

I did two 60 day Direct rollovers form institution “A” to institution “B” One (1) Roth and One (1) Traditional in 2013 within the 60 day timeframe. Unfortunately, I inadvertently swapped the amounts and put the larger amount in the Roth (25K) which should have gone to the Traditional and the smaller into the Traditional IRA (15K) which should have gone to the Roth.

This was a direct rollover done in March 2013. The institution will not correct the issue due to it not being their fault. This gives me a 10K overage in the Roth and 10K deficiency in the Traditional IRA. What options do I have. Publication 590 does not seem to address my stupidity. Can the excess be removed from the Roth and the 10K that should have gone into the Traditional be declared as income since it wasn’t rolled over in the 60 day window? Publication 590 addresses the 60 day rollovers but not “direct rollovers”.
Any suggestions would be appreciated. Thank you,



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Old 03-27-2014, 02:34 PM
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Quote:
Originally Posted by Jim98735 View Post
I did two 60 day Direct rollovers form institution “A” to institution “B” One (1) Roth and One (1) Traditional in 2013 within the 60 day timeframe. Unfortunately, I inadvertently swapped the amounts and put the larger amount in the Roth (25K) which should have gone to the Traditional and the smaller into the Traditional IRA (15K) which should have gone to the Roth.

This was a direct rollover done in March 2013. The institution will not correct the issue due to it not being their fault. This gives me a 10K overage in the Roth and 10K deficiency in the Traditional IRA. What options do I have. Publication 590 does not seem to address my stupidity. Can the excess be removed from the Roth and the 10K that should have gone into the Traditional be declared as income since it wasn’t rolled over in the 60 day window? Publication 590 addresses the 60 day rollovers but not “direct rollovers”.
Any suggestions would be appreciated. Thank you,
Whether you contributed more than you intended, converted more than you could afford, you can redirect your Roth contributions to a traditional IRA by taking advantage of the recharacterization rules.for example, A recharacterization allows you to undo or reverse a rollover or conversion to a Roth IRA. You generally tell the trustee of the financial institution holding your R-IRA to transfer the amount to a traditional IRA ,in a trustee-to-trustee or within the same trustee. If you do this by the due date for your tax return including extensions, you can treat the contribution as made to the traditional IRA for that year byeffectively ignoring the Roth IRA contribution. You can only recharacterize amounts rolled into a R-IRA from an employer-sponsored retirement plan by transferring them to a new or existing traditional IRA, and not back into the plan from which they were distributed. you have until October 15, 2014, to recharacterize. This deadline applies even if:you did not request an extension to file your 2013 tax return, and you file your return on or before April 15, 2014. if you recharacterize all or part of a rollover or conversion to a R-IRA, you cannot reconvert the amount recharacterized to the same or another R-IRA until the later of:30 days after the recharacterization, or the year following the year of the rollover or conversion. If you have already filed your return, you can file an amended return and subtract the amount recharacterized from the taxable amount of the rollover or conversion reported on your original return. Form 1040X can be used to amend your return. Generally, for a credit or refund, you must file Form 1040X by the later of:3 yrs including extensions after the date you filed your original return, or within 2 yrs after the date you paid the tax. There is no special tax form required for the recharacterization. You ned to complete taxes as you would based on the recharacterized status; the custodian records the item through Form 1099-R and Form 5498 with the IRS and you.
pleaseSpeak with the youre IRA custodian.



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Old 03-29-2014, 08:35 PM
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Thumbs up Thank you

Wnhough,

Thank you for the quick response, I really appreciate the detail.



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