How to Reverse an MDR for 2009
For 2009, I transferred 50K from a Tira to a RothIRA. I did not want to take my MRD for 2009 out of this Tira, but Fidelity automatically did take out the MRD on Dec 1, 2009. I didn’t discover the MRD until this week, while doing my Income Tax. I phoned Fideliy, and asked to reverse this MRD. They said they can not do this, since it was past 60 days since the MRD. They could only do a Rollover IRA back into the account within 60 days.
Since I was not required to take a 2009 MRD, is there any way I can put the money back into the Tira, now before I do my tax return? It seems the main problem will be that Fidelity will not issue a corrected 1099-R. They told me to contact a tax adviser.
Thanks for the help, Chuck
Permalink Submitted by Alan Spross on Thu, 2010-04-01 18:50
Chuck,
I am surprised the Fidelity had not modified their programming by December to avoid automatic RMDs. Were you set up for them to issue it automatically in December before Congress waived the 2009 RMD? Also, it seems that Fidelity would provide some sort of notice with your RMD that it was not required and you would have 60 days to roll it back if you did not want the RMD. Of course, many people needs these RMDS to live on. In any event, I am sure Fidelity covered their bases against a charge of custodian error given the huge number of IRAs they hold subject to RMDs.
You could request that the IRS waive the 60 day requirement for rollover IF you had not already used up your one rollover per 12 month period, but the fee for this is probably not worth it. You would also have to explain why you did not notice the RMD until now. You might check Pub 590, p 23 for “other waivers” for the 60 day deadline, but you do not qualify for an automatic waiver.
Of course, you could still reduce your tax bill by recharacterizing part of your conversion to offset the taxable RMD, but the net effect of that would less money in your Roth and more than you want in your taxable accounts.
Permalink Submitted by Charles Hall on Thu, 2010-04-01 20:06
Thanks for the quick answer, Alan.
You have confirmed my fears that the 60 days applies even in 2009. I could swear that I notified Fidelity to waive the 2009 automatic MRD, but I can’t find any proof. It looks like I am stuck with this. The real downside is that the extra income (about $17K) triggered the AMT so I am out an extra $544. But from what you describe, I will bite the bullet, rather than all the paper work that probably would fail anyway.
Chuck