2020 rmd received in error
The taxpayer requested IRA Trustee to not make RMD in 2020 under CARES Act. Trustee ignored instructions and made the RMD and withheld 20% tax. The taxpayer contacted the Trustee to correct this, and they restored the distribution, net of the 20% tax to her IRA. The trustee will not accept a check from her to restore the tax amount also back into her IRA. They say that that would constitute an impermissable second rollover. It is still within the 60-day rollover period. Is the trustee correct?
Permalink Submitted by David Mertz on Mon, 2021-02-08 16:01
The trustee is incorrect. The limitation on IRA-to-IRA rollovers is based on the number of distributions, not the number of rollover contributions. In this case only one distribution is being rolled over even though that one distribution was partially paid out as tax withholding. If this trustee refuses to accept the rollover of the portion withheld for taxes, it can be rolled over to an IRA at a different trustee since the 60-day deadline has not yet passed.
Permalink Submitted by JEFFREY MACK on Mon, 2021-02-08 16:38
Thank you for your response. I appreciate it.