contributed to SEP-IRA instead of Trad IRA
Client contributed $6500 and the money accidently went to her SEP IRA instead of her TRAD ira for 2016, 17 and 18.
Is there anything we can do to reverse this and still have her obtain the credit for tax purposes?
thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Thu, 2018-10-18 18:00
A TIRA contribution can be made to a SEP IRA account as long as it is reported to the custodian as a TIRA contribution when it is made. Client should check their Form 5498 to see if these contributions were shown as SEP or TIRA contributions and if their 2016 and 2017 tax returns conform to the 5498 forms. Note that if the 5498 forms show the wrong kind of contribution, there may or may not be excess SEP IRA contributions that would incur an excise tax for 2016 and 2017. The 2018 contribution status will only show on the IRA statements since no reporting has yet been done on that. The 2018 contribution can still be removed with allocated earnings, then re contributed to the desired IRA type, it cannot be recharacterized as a different type of contribution.