RMD IRA Rollover to Roth IRA
I have mistakenly moved the RMD for 2013 to a Roth IRA. At this point in time, what procedures do I need to go thru to unwind what I did? We reported the taxable RMD in 2013, but found out later we could not move those amounts to a Roth IRA. Thanks in advance for your time to address this issue.
Permalink Submitted by Alan - IRA critic on Wed, 2015-10-21 19:25
Your RMD is still considered completed, but the rollover created an excess regular Roth IRA contribution for 2013. You owe a 6% excise tax for both 2013 and 2014 on the amount of the excess contribution. This is paid with Form 5329 for each year showing the excess contribution. File the 5329 with Form 1040X and use the space on the 1040X to explain why you are filing the 5329. You also need to withdraw the excess amount before year end 2015 to avoid another 6% tax for 2015. There are no earnings calculations as any earnings stay in the Roth IRA. Since your Roth IRA is qualified if you made your first contribution before 2011, you do not have to report the distribution on Form 8606, but you do need to file a 2015 5329 with your 2015 return showing the distribution. The form will then show that the prior excess contribution has been removed and there will be no additional excise tax for 2015. It is possible that the IRS will bill you for late interest on the 2013 and 2014 excise taxes since they are being paid late.