Rev. Proc. 2020-46 self certifying letter

[eastcobb09]

Hi, I need to fill out the above, as I accidentally transferred my money to the wrong account.   Do I send this to the IRS via mail, or can I file electronically?

My broker is asking for a copy as well. 

Do I need to send any other accompanying documentation to the IRS?

Lastly...my understanding is I should pay the early withdrawal penalty upfront, in order to get a refund of that penalty.  Is that correct?  That is, I need to "rollover the entire amount" i Turbotax.

Pls advise if I'm doing things the right way here?  I'm having a very hard time finding someone with experience regarding 2020-46. Thank you.

[dmertz · Accepted solution]

You provide the self-certification to the IRA custodian (your broker?).  It's what allows them to accept a rollover after the 60-day rollover deadline has passed.  It is not to be provided to the IRS unless the IRS asks for a copy.

"Lastly...my understanding is I should pay the early withdrawal penalty upfront, in order to get a refund of that penalty.  Is that correct?  That is, I need to "rollover the entire amount" in TurboTax."

If in TurboTax you indicate that the entire distribution was rolled over (which you will do if you complete the rollover of the entire distribution under Rev Proc 2020-46), there will be no early-distribution penalty to pay up front and no penalty to refund.

[eastcobb09]

Dmertz, much thx for your kind response.  Very happy to come across someone with your expertise in this matter.   To piggyback off this, I have 10% of the distribution being withheld as federal tax.  As such, to "get that back", my understanding is I need to pay this same amount from my own funds, back to the IRA custodian.   That is box 4 from the 1099R.

On my 1099 R,  box 1,  is the full amount to be rolled over.    Once I agree within Turbo Tax to rollover the full amount to a proper IRA,  my refund will show me getting back the 10% I had to pay out of my own pocket to the custodian.   

Seems strange to me......pay the 10%....only to see the 10% returned to me a few weeks later as a refund.   But if that is what the 1099 in Turbo tells me to do, I'll do it...?

Thoughts?

[dmertz]

Tax withholding does not specifically apply to any particular portion of your tax liability, it is credited against your overall tax liability.  It just so happens that the default tax withholding on an IRA distribution is the same percentage that Congress chose as the percentage excise tax on an early distribution, but that doesn't mean that the 10% withheld for taxes is the early-distribution penalty.

Once the IRS has the money that was withheld for taxes, the only way to get back anything is to file a tax return showing that your overall tax liability for the year is less than the amount that you paid the IRS in tax withholding and estimated taxes.  The reason that your tax liability was less than the amount paid in tax withholding and estimated taxes is irrelevant.