excess distribution exceeding RMD amount

Submitted by Michael Porfido on Thu, 2022-08-25 18:56

The advisor miscalculated the clients RMD and distributed $38,246.59 over her RMD for 2022. My question is, can that amount be put back into her IRA as a 60 day rollover or excess withdrawal?

Thank you.



Submitted by Alan - IRA critic on Thu, 2022-08-25 19:42

Yes, a 60 day rollover can be used to roll back the amount in excess of the correct RMD amount. However, this rollover is subject to the one rollover limitation per 12 month period, so hopefully she has a rollover available. And if the rollover is completed, then she is locked out of another rollover for the coming 12 months.



Submitted by [email protected] on Mon, 2022-11-07 18:58

The same advisor did not realize that the clients account was set up to have a standing instruction RMD go out in October and it was processed. Now she has double the amount of her RMD going out this year. She is locked out of another rollover. Since this is a broker error, can you think of any way she can avoid this second RMD being taxable this year? We have checked with Schwab and they said they cannot do anything to reverse the distribution. Thank you.



Submitted by Alan - IRA critic on Mon, 2022-11-07 19:38

  • Only way to eliminate the tax would be if she still has a non IRA workplace account that would accept a rollover from an IRA, as that would be exempt from the one rollover limit.
  • Plan B would not eliminate the tax, but would provide a longer term benefit by converting the second distribution via 60 day rollover. A conversion is also not subject to the one rollover limit, and would preserve the tax deferral benefit of an IRA, being a more valuable account than the TIRA due to tax free gains and exemption from RMDs. This would provide a future benefit, but would not avoid the additional tax bill.


Submitted by [email protected] on Thu, 2022-11-17 19:32

Would it make any sense to apply for a private ruling letter to attempt to get the second RMD exempt from being taxed?



Submitted by David Mertz on Thu, 2022-11-17 21:56

The IRS has no authority to waive the one-rollover-per-12-months limitation.  Given that the distribution was made according to the client’s standing instruction to distribute in October an amount equal to the individual’s RMD for the year, it seems that there is zero chance that the IRS would rule favorably on such a PLR, and the cost to request a PLR is substantial.



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