Looking for some advice on this unfortunate situation. I took distributions from 3 different Prudential traditional IRA annuities with the intention of converting them to my Vanguard Roth IRA. These were indirect rollovers as the proceeds were deposited into my checking account. Rather than transferring the funds from my checking account bank to Vanguard, I wanted to use funds that were already available in my Vanguard after-tax brokerage account to complete the conversion. When I called Vanguard to do this yesterday, they said the easiest way to accomplish this was to transfer the conversion amount from my brokerage account into a traditional IRA account that I already had at Vanguard, and then convert the funds from that traditional IRA to my Vanguard Roth IRA account. They were able to process the transfer over the phone. It wasn't until this morning that I realized that there's a major problem with this approach. Only one indirect rollover is allowed by the IRS in any 12 month period, and this transaction would be considered 3 rollovers based on the IRS aggregation rule for indirect IRA rollovers. Had the transfer been made directly into my Roth account (which is what I had originally planned on doing!) I wouldn't have had a problem as Roth conversions are unlimited. I've yet to call Vanguard to address this (they're only open weekdays and today is a Saturday) but I'm wondering if anyone has any thoughts on how this can be resolved with no or minimal negative tax implications. The conversion amount is almost 6 figures so any negative tax implications could be significant. Can the transfer into my traditional Vanguard IRA be withdrawn as an excess contribution, or recharacterized as a Roth IRA conversion? I've got plenty of time before the 60 day indirect rollover window closes. Next time I convert to a Roth, I will go with a direct transfer to avoid any problems like this!
Thanks for any advice you can provide.
