Correcting RMD in error

[svh77]

I received a RMD from an inherited IRA for 2020 in error.  We were supposed to be able to not take RMDs due to Covid, and the custodian did it correctly for my individual IRA but someone dropped the ball on the inherited IRA.  I didn't discover it until day 62, so entry cannot be reversed.  Now they tell me to write a check from the account it went to for the exact amount and send it to the account it came from marked "2020 rollover".  Is this correct?  If so, how will it show on my year end documents and how do I show it on my tax forms?

[ThomasM125 · Accepted solution]

Since the error was made by the financial institution that was holding the investment, you may qualify for an exemption to the 60 day rollover requirement. This would entail making a written self-certification to the plan administrator. You can read more about the requirements under IRS revenue procedure 2016-47 here:

https://www.irs.gov/pub/irs-drop/rp-16-47.pdf

[dmertz]

If you are a non-spouse beneficiary, the 60-day rollover deadline does not apply and instead the deadline for rolling over the distribution was August 31, 2020.  After August 31, 2020, no rollover is permitted by a non-spouse beneficiary even if it has been less than 60 days after the date of the distribution.  See III.D in IRS Notice 2020-51:  https://www.irs.gov/pub/irs-drop/n-20-51.pdf

If you are the surviving spouse of the decedent, you can roll it over you your own IRA but not back to the inherited IRA, although after the 60-day deadline you would have to do it pursuant to IRS Notice 2016-47 by certifying that this would qualify for waiver of the 60-day deadline:  https://www.irs.gov/pub/irs-drop/rp-16-47.pdf

[svh77]

Thank you for the response to my question.  I've reviewed Rev Proc 2016-47.  I'm still unclear what happens next, and how to reflect the situation in my tax return.

I've received a 1099 showing the RMD, should I expect to receive a corrected 1099 with the RMD reversed?

If I don't get a corrected 1099, how do I handle it on my tax return?

Many thanks!

[dmertz]

svh77, are you a spouse beneficiary or a non-spouse beneficiary?  If you are a non-spouse beneficiary, the distribution is not permitted to be rolled over at all at this point.

[okboogie]

Two days ago you promised me a reply by email. I'm waiting. Fix error on line 4b so you can send tax info to IRS.  Please reply to [email address removed]

[VolvoGirl]

@okboogie  I don't see any other posts from you.  What problem are you having?