In 2010, I closed and transferred 27K from a savings acct., at one bank. After doing this I went to a new bank and opened an IRA Acct., with this same money. I got confused as I had another, smaller IRA that I rolled over into the new bank as well, but that was a real IRA money.

When the 27K IRA matured in 2013 I took a look at the my paperwork and discovered my error from 2010. I called the bank and told them and they said to withdraw it or I would be liable for a 6% tax of some kind. I did this and received a #1099 for the 27K in Jan 2013.

First, I never took any IRA Deductions for this money on my 1040A so there was no advantage to doing what I did, since this was money I had already paid taxes on.

I have been taking distributions on a 403B and another small IRA (it really is one) as well as the account mentioned above (not an IRA) since 2012 when I turned 70 1/2. My only income is Social Security ($650.00) and bank interest so I have not had any tax liability since I working several years ago.

What is the best way to handle my mistake, or is there a way? I have not filed Form #8606 nor Form 5329 - Part III (which I read about) because I can't understand if there is a way correct my error or should I just pay the tax on the closed account? Is there a 'waiver' I could file? How about a lump sum distribution? I have doing a lot of reading but I really don't know anything about taxes and am just grasping at straws.