Excess RMD distribution

Submitted by steve jackson on Tue, 2019-12-17 18:13

Custodian took out RMD for client over 70.5 in May that satisfied yearly RMD this year, and then inadvertantly again in December creating a duplicate RMD being taken out.( RMD amount taken out twice) client just received second check for duplicate unneeded RDM. Can Client just endorse check back to Custodian, how to redeposit excess RMD back into IRA. Does this not fall under 60 redeposit or correction.
Thank you for any ideas or clarity.
Steve



Submitted by Alan - IRA critic on Tue, 2019-12-17 18:53

  • Client could simply roll the excess amount back to the IRA. However, that uses up the one rollover permitted for 12 months and it’s possible that client had already used that one rollover and therefore would not be eligible to do another. If client wants to attempt to preserve the one available rollover, then client needs to attempt to return the check and ask that it be re credited to the account and not reported on a 1099R form or a 5498 that reports rollover contributions.  The custodian would probably only agree to this if the second distribution was totally due to custodian error.
  • Therefore, doing an actual rollover is easier but has it’s downsides due to the one rollover limit. Convincing the custodian to process the returned check as if never issued and pull it from their 1099R reporting system can be a hassle and meet with resistance. Client therefore needs to make a choice between these two solutions.

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