topic IRA withdrawal in Retirement tax questions

IRA withdrawal

1holstein — Fri, 03 Jul 2020 03:46:46 GMT

The 1st week of December I took the RMD from IRA account. Due to a misunderstanding, a second RMD in the same amount was taken the third week of December 2019. When I discovered the mistake January 20, 2020 I asked them to reverse the second withdrawal. It was placed back into my IRA and was called a contribution. They gave IRS a 1099=R showing $40,000.00 when in reality I only received $20,000.00.

They withheld income tax on the $40,000. How do I report the reversal so I do not have to pay taxes on $40,000.00? Because it was reversed within 60 days, it is legal.

Re: IRA withdrawal

macuser_22 — Fri, 03 Jul 2020 04:19:03 GMT

If within 60 days then it was a rollover.

Be sure to answer the RMD question that some of it was a RMD and enter the amount as $20,000 or it will not allow a rollover of a RMD.

Enter a 1099-R here:

Federal Taxes,
Wages & Income
I’ll choose what I work on (if that screen comes up),
Retirement Plans & Social Security,
IRA, 401(k), Pension Plan Withdrawals (1099-R).

OR Use the "Tools" menu (if online version under My Account) and then "Search Topics" for "1099-R" which will take you to the same place.

Be sure to choose which spouse the 1099-R is for if this is a joint tax return.
Be sure to pick the correct 1099-R type: Standard 1099-R, CSA-1099-R, CSF-1099-R, RRB-1099-R.

If this was a rollover answer the question that you moved the money to another retirement account (can be the same account). The screen will open up with choices of where it was moved. Say you did a combination of things. Enter the amount rolled over in the top box.

[NOTE: When you get to the "Your 1099-R Entries" screen where you can add another 1099-R, use "continue" to keep going as there are additional interview questions after that screen in most cases. You can always return as shown above.]

It will show as income on the summary screen which shows gross income, not taxable income.

The income will be reported on line 4a on the 1040 form with the word “ROLLOVER” next to it if it was a rollover.

The taxable amount will go on line 4b. In the case of a rollover, that amount will only the amount of the RMD.

Re: IRA withdrawal

Critter-3 — Fri, 03 Jul 2020 16:26:37 GMT

I have a real problem with this statement " It was placed back into my IRA and was called a contribution. "

Talk to the IRA custodian ... it CANNOT be a contribution ... it must be reported as a rollover on the form 5498.

AND you cannot do this again for 365 days from the date of the second distribution so be careful it doesn't happen again.

Re: IRA withdrawal

macuser_22 — Fri, 03 Jul 2020 19:59:11 GMT

@Critter-3 wrote:

I have a real problem with this statement " It was placed back into my IRA and was called a contribution. "

Talk to the IRA custodian ... it CANNOT be a contribution ... it must be reported as a rollover on the form 5498.

The financial institution would not allow a new contribution if it exceeded the contribution limit. They most likely said that it was a "rollover contribution" which is what the IRS calls a rollover. Technically it is a contribution but not a new contribution. That is how the 5498 describes it for box 2:

Box 2. Rollover Contributions

Enter any rollover contributions (or contributions treated as rollovers) to any IRA received by you during 2020. These contributions may be any of the following.

A 60-day rollover between Roth IRAs or between other types of IRAs.