@dmertz Thanks for your reply!
Yes, we are talking about 2025 RMDs. I think we don't want to roll the dice in this situation given the possible consequences.
The Fidelity 403(B) group is quite adamant about the necessity of filing the Form 5329 which calculates a 25% penalty on the RMD that was impermissibly rolled over, then asking for a waiver of the penalty which they say is generally granted if done in a timely manner. I've looked the form over briefly and am unsure which part applies here, i.e., Part III Additional Tax on Excess Contributions to Traditional IRA or Part IX Additional Tax on Excess Accumulation in Qualified Retirement Plans. Thoughts? Also, does Turbo Tax support generation of a Form 5329?
Second question is about how the rollover and return of the excess contribution will be reported to us on the 1099-Rs. One 1099-R will report the rollover with code "G", I'm assuming showing the original transaction including the impermissible RMD amount. The second 1099-R will show the withdrawal of the impermissible RMD amount, with the code "7" normal distribution, and will be taxable income. But are you saying that Fidelity's first 1099-R will be (or should be corrected by them) to show the actual amount that should have been rolled over?
Another way I am thinking of handling this situation, is to fill out form 5329 (as permitted by Turbo Tax) and pay the 25% penalty which would in this case be about $125 (25% of $505 RMD). No letter or explanation required and I can file electronically. Thoughts?
I am also thinking of counseling my husband to put off rolling over his second 403(B) until 2026. He would just take the RMD required for it. Do you think this will avoid complicating matters more than they already are?
Thanks again.
