OK, let me try to explain:
1. I took a $240,000 distribution from my Fidelity 401K and had 36% taken out by them for Federal and State Taxes. The net distribution to me was $150,000. Thus, Fidelity dutifully issued a 1099 R showing the distribution. This happened in early February 2015
2. The real estate investment transaction for which we were going to use the funds fell through, but I still had time to roll over the distribution into a new IRA. We opened a new IRA with Chase Bank and deposited the $150,000. Of course the rest of the distribution had been sent to IRS and it was then we were told that there was no way, at that time to "claw back " the tax. So even though we met the rollover time frame, the IRS held their part of it
3. I was told by Chase that the only way to retrieve the taxes and deposit them in the new IRA was to handle it via my Tax Return. Trouble is that now I can find no way in Turbo Tax to inform the IRS that they are holding the rest of the funds that should be able to be rolled over
4. Chase then will issue a confirmation of the rollover for $150,000. I claimed it on my 2016 filing, but of course the difference in taxes paid to IRS magically just disappearing. Turbo Tax allowed me to enter the $150,000 rollover which qualifies me for a $55,000 refund, but the rest of the Tax stays with IRS.
5. At the same time the new IRA would be taxable again! I had intended to take the $55,000 plus the other $45,000 paid to IRS at the time of the distribution and add it back to the IRA....thus increasing it back up to the original amount.
I can't believe that there is no way to get the taxes paid reimbursed....especially since the IRS has no procedure for getting it back to us immediately after receipt to meet the rollover requirements. Am I really out the extra $45,000?
