QRP rollover
Asking on behalf of…
In 2008 a rollover from a Qualified plan was rec’d for a
> customer and put in a traditional IRA. Now the QP trustee is requesting a portion of the rollover back plus interest due to a calculation error.
> How do I distribute the monies from the current Traditional IRA so the customer does not have to worry about paying taxes on the amount plus interest returned?
The letter I rec’d from the Plan Trusee indicates that government reporting will be adjusted to show the proper distribution.
> Does that sound like to you I will need to adjust as well?
Thanks
Permalink Submitted by Alan Spross on Mon, 2009-03-02 05:47
Advise the IRA custodian that $x of the rollover contribution was due to incorrect information, and must be distributed as an excess contribution with allocated earnings. See last paragraph on p 50 of Pub 590. Customer will need to include an explanatory statement with his return that the correction was due to incorrect rollover information form the qualified plan, and the funds had to be returned to the plan. Following is a copy of section 408(B)5 of the IRS Code:
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Excess rollover contributions attributable to erroneous
information
If –
(i) the taxpayer reasonably relies on information supplied pursuant to subtitle F for determining the amount of a rollover contribution, but
(ii) the information was erroneous, subparagraph (A) shall be applied by increasing the dollar limit set forth therein by that portion of the excess contribution which was attributable to such information. For purposes of this paragraph, the amount allowable as a deduction under section 219 shall be computed without regard to section 219(g).
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Permalink Submitted by Linda Randazzo on Mon, 2009-03-02 11:41
Thanks Much