2020 RMD rollover of funds – does the vendor have the right to refuse?

Submitted by Amanda Minter on Fri, 2020-04-17 13:58

I have a client who has standing RMD instructions on her IRA. The RMD was paid and now that they are not required for 2020 she would like to have the money reinstated into her IRA.

The vendor is taking a hard line and refusing her request.

Can they refuse the rollover back into the same account the RMD was taken from?



Submitted by Alan - IRA critic on Fri, 2020-04-17 14:07

Don’t know why they would, particularly for an IRA, but they are allowed to not accept the rollover. Perhaps this is due to the one rollover limitation, or the distribution was made in January?  Is this an IRA annuity?  In any event client can open a new IRA elsewhere for the rollover if they qualify for a rollover according to IRS rules.

Submitted by Amanda Minter on Fri, 2020-04-17 14:11

Rollover does not come into play in this situation.  The annuity company did withhold taxes.  They are refusing to take the rollover.1 – we understand we can open a new IRA…thank you.2 – what happens with the withholding that was kept by the annuity company?

Submitted by Alan - IRA critic on Fri, 2020-04-17 15:02

The withholding was forwarded to the IRS and will be credited against her 2020 taxes. But in order to complete the rollover and eliminate all taxes on the distribution, client will have to replace the amount withheld with other funds. Otherwise the amount withheld itself will be taxable. 

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