401k Rollover went to wrong IRA accounts
I’m looking for advice on how to handle a 401k rollover with errors. I rolled over a 401k that had both pre-tax contributions and Roth contributions. It was a direct rollover from a Vanguard 401k to Vanguard IRAs that already existed. Instead of the Roth portion ending up in the Roth IRA and the pre-tax money ending up in the traditional IRA, they went to opposite accounts. This transaction just happened but I’m looking for advice on how to handle it with Vanguard. The pre-tax portion is large enough that I would prefer to have it in the traditional IRA and not convert it to Roth. I did not see how the checks were made out as it was a direct rollover. Thank you.
Permalink Submitted by Alan - IRA critic on Sun, 2023-05-21 02:26
Call the IRA custodian # and explain what happened. If they are not inclined to look into the transaction, remind that they a Roth 401k balance is not eligible to be rolled into a non Roth account, and since that would have to be re distributed as an excess contribution. You might also call the 401k administrator’s # and ask them what the 1099R forms will show as to gross amount and Box 7 codes. Hopefully, you know the balance of each portion and the appropriate rollover amounts. Since this cannot be corrected without custodian cooperation, perhaps with VG on both ends they can re do the contribution deposits. Hopefully, this occurred this year and no 1099R forms have been issued.
Permalink Submitted by Laura Homan on Sun, 2023-05-21 02:48
Yes, I do know the amounts of each portion. I made copies of the document that came from my former employer’s 401K plan that I sent in to initiate the rollover. That document had the amounts of pre-tax and Roth money. This occured last week, so no 1099R forms have been issued yet. I will give them a call first thing on Monday.