@hipstirred
Since they restored the net amount of the distribution to the account.....and that was also apparently done within 60 days?....you enter the 1099-R as-is.
BUT...you carefully go thru the follow-up questions after the main 1099-R form. There is one that asks if you rolled over or moved the $$ into another retirement account ...and you indicate that you did (yeah...it was the same account...but that qualifies too).
Then you indicate the $$ amount that they took back,
The net effect should be that a $$ amount equivalent to Federal and state withholding will be added as taxable income, not the whole distribution. Then you get full credit for the taxes withheld because you entered those withholding $$ in box 4 (and box 14 for state).
This should likely result in a fairly good sized refund....The reason the issuer couldn't restore the entire amount, was likely that they had already sent out the withholding $$ to the IRS and State under your SSN.
Yeah, their mistake did jack up your income....but not the full amount of the distribution.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
