I am 68 yrs old and opened a Roth IRA with funds from Traditional IRA. I was incorrectly advised that I was not eligible to open the Roth so I submitted a Overpayment Return request to Fidelity.
The money was returned to my cash account.
My understanding is that because it was not an overpayment my request to have the "overpayment" returned was not valid.
Not sure how to file this error and calculate tax and possible penalty.
Call to IRS was not helpful
Thank you in advance.
Unless Fidelity mistakenly recorded the Roth conversion as a regular contribution, it sounds like you simply have a reportable Roth conversion and a reportable regular Roth IRA distribution. There would no penalty and, if it has been less than 60 days since you received the distribution from the Roth IRA, you should be able to roll this distribution back into a Roth IRA, subject to the one-rollover per-12-months limitation.
On what dates did these transactions occur?
Did you make any regular Roth IRA contributions for 2022 or for 2023?
You should check with Fidelity to see if they recorded the deposit into the Roth IRA as a conversion or instead as a regular contribution. You should also check with them to see the type of distribution (code T or code J8, or maybe even code JP if they think that they returned a 2022 contribution) they will be reporting on the 2023 Form 1099-R.
"The money was returned to my cash account."
What was the date?
If the return of funds was due to custodian error, you may have recourse.
Both transactions were in 2023. It was my error. I asked for return of over contribution that was a legit conversion of funds from Traditional IRA.
Thank you
Unless Fidelity mistakenly recorded the Roth conversion as a regular contribution, it sounds like you simply have a reportable Roth conversion and a reportable regular Roth IRA distribution. There would no penalty and, if it has been less than 60 days since you received the distribution from the Roth IRA, you should be able to roll this distribution back into a Roth IRA, subject to the one-rollover per-12-months limitation.
On what dates did these transactions occur?
Did you make any regular Roth IRA contributions for 2022 or for 2023?
You should check with Fidelity to see if they recorded the deposit into the Roth IRA as a conversion or instead as a regular contribution. You should also check with them to see the type of distribution (code T or code J8, or maybe even code JP if they think that they returned a 2022 contribution) they will be reporting on the 2023 Form 1099-R.