My question is how to avoid the consequences of a 401(k) distribution in cash that I didn't ask for.
Background: traditional (non-Roth) 401(k) with Principal Financial. I'll reach age 70 this year (70½ next year). I retired in March of this year. In September I initiated a 100% direct rollover from the
401(k) to my Vanguard traditional IRA. Principal said they mailed the check on 30 Sept, though I suspect they were fudging since Vanguard didn't get it till 8 days later.Separately, on 3 October, Principal cut a check for $1.96, which was gross amount of $2.44 less 20% withholding of $0.40. Note that this was _after_ they had processed my rollover. They mailed this to me, not Vanguard, made payable to me, not Vanguard. The accompanying letter says "This represents an additional contribution to your account. Additional contributions under $200 are paid in cash." I assume it's dividends or interest paid at end of month on the mutual finds.
It was not my intent to take any IRA distribution this year, but now I have $2.44 of distribution. Admittedly the amount is small, but it's really the extra accounting that I'd like to avoid.
I haven't contacted Principal to get them to redo this as a rollover, but I can't imagine they'd agree to that.
I understand that I can't undo the 40 cents withholding, but will have to claim it next April. (Or not claim it, since it rounds to zero dollars.)
Questions: Can I undo the distribution by transferring $2.44 from my bank account to my Vanguard IRA? If I do that, will it have any bad consequences, such as impacting my contribution limit to my Roth IRA? (This being the last year of working, I intend to contribute the full allowed $7000.)
Or am I better off just to say "what's done is done" and list it as a taxable distribution on my 1040 lines 4a and 4b?