IRA conversion error
Sir/ Madame,
I recently aimed to move $15,000 cash in an online transaction from my traditional IRA to my Roth account, both of which are housed at Vanguard. Regrettably, the entire account was moved through an in-kind transfer to my Roth account leaving me with a potential gigantic tax bill. I received a delayed confirmation of the transaction ( a day later) and reached out to Vanguard immediately to find out the the entire account had been converted to a Roth. Despite numerous follow ups from my end with in days of the trade, Vanguard has refused to reverse the trade/ transfer saying the keyboard error was mine and citing the 2018 tax law changes covering IRA’s. The have asked fora private letter ruling from the IRS before they will agree to do anything.
Clearly this was a keyboard error on a opaque trade platform and there was no attempt on my part to do anything other than move some spare cash sitting in my IRA to my Roth account.
Please advise any steps I might take to get this problem rectified.
Permalink Submitted by Alan - IRA critic on Tue, 2019-05-28 15:41
While unfortunate, I know of no way to reverse this, and do not think spending 20k for a PLR is warranted. Even if you could prove this as a typo, the IRS would be unlikely to reverse it. It would probably take some extraordinary circumstance such as an unauthorized person entering the info, or if you were not competent and had a conservator or something similar. It is possible that many years down the road you may view this differently when you eliminated RMDs and tax rates have been increased. Anyone reading this should be extra careful in doing conversions and with any distribution or trade should very carefully review the confirmation screen before hitting the “Submit” key.