60 Rollover – wrong transaction description
I took a distribution from my Roth IRA at Vanguard and was putting it back before 60 day limit.
I was putting money back into the same account using several online transactions. On one of the transactions , I selected a wrong desciption which is “Rollover Conversion” while other correct transactions are called “Rollover”.
I called Vanguard and asked them to change the description of the transaction but they said it is impossible and the only thing I can do is to remove it as excess contribution.
My question is it possible the person I spoke to is not knowledgeble enough and they can change the transaction description? I am pretty sure at another brokerage they once did similar thing and reclassified the transaction.
Permalink Submitted by Ben Meyer on Thu, 2015-02-19 01:49
You might try asking your bank to reject the transfer when it comes through. Bank fees might apply, but the bank may agree to a waiver.
Permalink Submitted by Paul Markovsky on Thu, 2015-02-19 02:14
That was a week ago. Don’t think it is possible to reject the transaction.
Permalink Submitted by [email protected] on Thu, 2015-02-19 14:52
Wouldn’t this be a violation of the 1 rollover rule that is effective in 2015?
Permalink Submitted by Paul Markovsky on Thu, 2015-02-19 21:51
No it won’t. You are allowed to make 1 distribution, but you can return money using as many transactions as you want.
Permalink Submitted by Jose Morales on Thu, 2015-02-19 22:32
The problem is you cannot simply change how a transaction is reported once it has been done (at least not if you are a legitimate and knowledgable IRA Custodian that wishes to operate within the law). You identified a transaction as a conversion and the custodian processed the transaction exactly as you identified it to them. There is no error that the custodian needs to correct. If the funds were not eligible to be deposited as a conversion (they did not originate from a Traditional IRA) then they are now potentially an excess contribution (or can be deemed an excess) and should be removed as such. You can then complete a deposit as a rollover. In fact, you can complete a rollover now before you even correct the ineligible conversion. The reporting will be a mess with multiple 1099-Rs and 5498s, but as long as you document everything you should have no problems if you ever have to explain what happened to the IRS.
Permalink Submitted by Paul Markovsky on Wed, 2015-04-08 22:53
Vanguard was very helpful and after I sent a letter explaining the mistake, they changed the description of the transaction.The initial transaction is still shows old description but they did some other transactions so I assume the resulting 1099 will show the correct amounts.
Permalink Submitted by Alan - IRA critic on Wed, 2015-04-08 23:14
Was the original distribution in 2014 or 2015? Since you don’t have a 1099 yet, I assume it was in 2015, and the 5498 forms for 2015 are not issued until May, 2016. That is a long time to be in limbo, so you need to review what VG is showing now in detail, and if you have questions, give them a call. You might ask specifically for them to confirm that no conversion will be reported on a 5498 for the problem transaction.
Permalink Submitted by Paul Markovsky on Tue, 2015-04-14 23:07
The original distribution was in Dec, 2014 and I was putting money back in 2015. Got a reply from Vanguard. They just changed the the description of that transaction to proper one (‘Rollover’).And I remember similarly a transaction was reclassified several years before by another brokerage. So it is possible to change the descirption.Thanks for help.
Permalink Submitted by Alan - IRA critic on Tue, 2015-04-14 23:20
Good. If the distribution was in Dec, 2014 you must have a 1099R reporting it. You should be able to report this on line 15a and 15b of Form 1040 as a rollover on your 2014 return. Then, when you get the 5498 form next month, be sure it agrees with what VG told you. But from now on you must be careful because you cannot do another 60 day rollover from this IRA for 12 months from the Dec 2014 distribution date. Use of IRA funds for up to 60 days are severely limited under the new rollover restrictions effective this year.