Merrill Lynch.force closed my IRA account. withholding 10% for taxes. I deposited the balance into another IRA account within 60 days. What options are available to me?

[munishkumargarg]

Merrill Lynch forced closure of my IRA account. I did not request it. They sent a letter and then closed the account. They also withheld 10% for taxes. I deposited the balance into another IRA account within 60 days. I noticed it when I got the 1099-R. They are saying that they have remitted the money to IRS and cannot do anything now. I feel so cheated. I never requested the withdrawal in the first place. How can I get the withheld money back. If not, what options are available to me? Thank you in advance for all your help. 

[LisaBr]

You will enter the 1099-R exactly as it reads.  This will include the tax paid. 

After entering this information, you will answer the questions that follow.  One of the questions will be What Did You Do With The Money From This Payer?  Your answer is moved the money to another retirement account.

This answer will open up more questions wanting clarification of exactly what type of account you rolled the funds into.

You will see that you won't have to pay taxes on the amount rolled over.  The next page asks if you added the amount taken out for taxes to the rollover, you will answer No.  Next, you will enter the exact amount rolled over. 

Continue to get through the remainder of questions regarding this 1099-R.

When completely done, switch to Deductions and Credits from the tabs above.  Select Estimates and Other Taxes Paid.  Choose Other Income Taxes. 

On this page it describes taxes already withheld.  Click on the blue Where does the number for other income taxes come from?  This Federal tax figure includes the amount withheld from the 1099-R. 

This means you are getting credit for what was paid as taxes and you are not being taxed on the rollover amount.

[dbei]

Good information.  I am facing the same issue.   How can I contact Turbo tax expert about this information

dbei.

[MarilynG1]

Unfortunately, it probably says somewhere in the fine print that they can do this.  They probably notified you, but if you moved (or changed emails), you may not have seen it.  When you enter your 1099-R, and indicate that you rolled the entire amount over, you won't be taxed on the distribution.  

They took 10% tax out, because they are required to do so by law for certain types of accounts.  I doubt that the IRS would refund you any of the tax, though maybe it will help your tax situation this year. 

Here's more info on Involuntary Distributions.

@dbei