I was paid a different amount than I requested for my Ira dist. Can it be corre

I asked for my distribution to be made out of three annuities and asked that income tax be deducted from each payment. When I received the checks, they had added the income tax to the amount of the distribution, rather than deducting the income tax, resulting in an overwithdrawal of $6300.00, and no income tax was sent to the IRS. I was told that once a distribution was made, it could not be corrected. It was not my error, but an error made between Edward Jones and the insurance companies from which the annuities were purchased. Why can this not be corrected?

Reply to
Dorothy
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Assuming this happened less than 60 days ago, here's what I'd do. Go to your bank and open an IRA, depositing the entire amount. The is called a "rollover." Then you take the distribution you want with the withholding you want from that IRA.

Then I'd move everything from Jones to some place where they remember whose money it is.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

On Sat, 23 Nov 2013 07:09:41 EST, Phil Marti wrote in Re Re: I was paid a different amount than I requested for my Ira dist. Can it be corre:

That is very good advice.

Reply to
Vic Dura

A minor point to watch out for: if the distribution can be attributed to being a RMD, then it cannot be rolled over. The OP did not bring up this issue, though and thus it might not be relevant to this case, though.

--Dilip Sarwate

Reply to
dvsarwate

OP specified that the money came from an IRA. The provision you mention applies to distributions from 401(k)'s, but not from IRAs.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

Phil:

I am aware that what the IRS says in its Publications is not always the same as what the law says, but I do wish to point out that in Publication 590 (for 2012 returns; as far as I know the 2013 edition has not been released as yet) says in the section on Required Minimum Distributions (page 34, column 2) that

"Distributions not eligible for rollover. Amounts that must be distributed (required minimum distributions) during a particular year are not eligible for rollover treatment."

Does the law say that RMDs are eligible for rollover treatment (but the IRS disagrees with this and so denies the eligibility in Pub 590), or did the law change during 2013?

--Dilip Sarwate

Reply to
dvsarwate

The first moneys from an IRA (not 401k) are deemed to be RMD and cannot be rolled over.

Reply to
Arthur Kamlet

The rules on RMDs are quite simple. An RMD from an IRA or an RMD from any qualified retirement plan are NOT eligible rollover distributions. Simply put... you can't rollover an RMD.

Timing is not an issue. There is no requirement as to how you must withdraw your RMD. The only requirement is that it be concluded by midnight of 12/31. Therefore, if you are subject to RMDs, you can take distributions from an IRA or a qualified plan in January and roll them over to another plan or IRA within the requisite 60 day time frame. You still have the balance of the year to take your RMD. The law only requires that no part of your annual required distribution be rolled over.

As one never knows what may transpire over a year's time frame, the smart move is to take your RMD first and then make any decisions about rollovers later. The most obvious violation of this rule is when people rollover retirement plans to IRAs in order to have more flexibility in the investment choices. If that retirement plan was subject to RMDs, you must first take the RMD and then perform the rollover to an IRA. Fail to do that and you would have missed your plan RMD and be subject to the excess accumulation penalty.

Reply to
Alan

Ah, Pub 590--one of the most confusing pubs--strikes again.

Your quote is absolutely correct. Now look at the second of the Miscellaneous Rules on page 39, which clearly says you don't have to take an RMD from every account. These seem to be in conflict. The only thing I can think of is that page 34 is simply saying (not very well) that rollovers don't count as part of your RMD (which is also what I think the law is saying).

There were other responses after yours that said I was wrong to some extent. When in doubt, let's go to the law.

IRC 402(c)(4) specifically says that RMD's from 401(k)'s cannot be rolled anywhere. This interpretation is confirmed in 26 CFR 1.402(c)-2 Q&A 3(2).

Moving on to IRAs, rollovers are covered in IRC 408(d)(3). "AHA" I hear as people come to subparagraph (E), which, according to its header, prohibits the rollover of "required distributions." Read on. The only required distributions that cannot be rolled over are those to beneficiaries.

I can't prove a negative. If someone can come up with a Code or Regulations reference which requires the type of RMD we're talking about from every separate IRA account I'll be glad to look at it. Until then, I'm sticking with my original answer that the "no rollover of RMD's" rule doesn't apply to IRAs but does apply to employer plans.

My plain English explanation of this mess is that the onus of making RMD's from employer plans is on the plan, while the onus for IRAs is on the owner, thus the different rollover rules.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

If you can rollover an IRA RMD doesn't that make the IRA RMD rule meaningless?

Reply to
SD

Look at these scenarios as a matter of timing and whether the timing changes anything.

Example: Your RMD is 1000.

In March you take a 1000 distribution and within 60 days you roll it over into an IRA or other approved plan.

Then in September you take anoher 1000 distribution. Can you consider the latter distribution to be your RMD?

Reply to
Arthur Kamlet

Maybe it will help if you look at the RMD as a dollar amount, not a specific transaction. We'll assume you're 73 (to avoid all the required start date stuff). Your 2013 RMD is based on your 12/31/2012 account balance(s) and your 12/31/2013 age. This amount is fixed as of 1/1/2013. Let's say it's $1,500. That means that between 1/1/2013 and 12/31/2013 you must completely remove $1,500 from under the retirement plan umbrella. A rollover isn't a removal. How you get there is up to you, and it matters not what else goes on in your IRA account(s) during the year.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

Yes, because you satisfied the 12/31 due date requirement.

Reply to
Alan

Did you deposit the checks? Did you submit your distribution request in writing? If no and yes, I *think* they should be able to correct their error because you did not wait until the end of December, and they have not created the 1099R, yet (even that can be corrected).

I would pursue it if it is EJ's bizarre error. Has this happened before? I have had a minor error on an IRA withdrawal (deposited in the wrong account at the same FI) that was corrected by journal entry. However, the funds were an internal transfer. JMO.

If you can live with what they did this year, and make any needed quarterly estimated tax payments, that may be your only or last resort. As the others have suggested, I would move my IRAs if possible.

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