Double IRA required minimum distribution taken by mistake
December 7, 2019 1:33 PM Subscribe
How do I fix the problem of mistakenly taking my IRA RMD twice in 2019?
Ugh. I just discovered that I already withdrew one RMD distribution in early January, 2019 and totally forgot I'd done so. Not wanting to miss the Dec. 31st deadline for 2019, I requested another RMD for 2019! The check is en route--not cashed, not deposited, etc. Anyone know how to deal with this?
Ugh. I just discovered that I already withdrew one RMD distribution in early January, 2019 and totally forgot I'd done so. Not wanting to miss the Dec. 31st deadline for 2019, I requested another RMD for 2019! The check is en route--not cashed, not deposited, etc. Anyone know how to deal with this?
Call the bank, ask them to cancel it. Or. Have you maxed out your own IRA contribution? You could use this cash to do so.
posted by theora55 at 1:44 PM on December 7, 2019
posted by theora55 at 1:44 PM on December 7, 2019
Totally call the bank/brokerage, I’m sure people do this all the time.
posted by mskyle at 1:50 PM on December 7, 2019
posted by mskyle at 1:50 PM on December 7, 2019
They should be able to stop the check and reverse the distribution. I have just been through this with my own IRA (not a RMD, but I filled out the same form). Schwab could not manage to cut a check for the right payee/amount so we ended up having to stop payment/try again... 5 times!
To make life easier, they can probably leave the cash in the account and you can pull it out in January, right?
posted by acidic at 2:03 PM on December 7, 2019
To make life easier, they can probably leave the cash in the account and you can pull it out in January, right?
posted by acidic at 2:03 PM on December 7, 2019
If it's a Roth IRA you can just put the money back, but if it's a regular IRA and you're 70.5 or older you can't. Call them up on Monday and see if you can just get the check canceled.
posted by mareli at 2:06 PM on December 7, 2019 [1 favorite]
posted by mareli at 2:06 PM on December 7, 2019 [1 favorite]
Best answer: You can return the distribution, but you must do it within 60 days of the withdrawal date. Call your custodian and ask them the quickest way to reverse the withdrawal. They will probably want you to return the check. They may or may not require you to endorse the check. And then include explicit instructions with the returned check. So get this information from your custodian and follow it to a tee within 60 days of when they wrote the check.
This is assuming that your January 2019 withdrawal satisfied your 2019 required distribution. Anything more than that, presumably your December withdrawal, is not an RMD but simply an ordinary withdrawal, so you can do a rollover within 60 days back into the IRA.
Also note that you can only do one rollover per 12 months. So if you rollover this excess withdrawal, you can't do it again for 12 months - so don't screw up next year!
But here is another thing to consider. Are you sure this second RMD is not required? If you turned 70.5 in 2018, you had the option of taking one RMD in 2018 and one in 2019. Or the option of delaying your first, 2018, RMD until 2019 and then doing your second RMD also in 2019. So your 2018 and 2019 RMDs are both in 2019. So in that case, it would be entirely correct to withdraw two RMDs in the 2019. This is a one-time case for your first two RMDs. Thereafter you must only do one per year.
So first, make sure this isn't a required second RMD. If you did an RMD in 2018, then you also only do one in 2019.
posted by JackFlash at 2:30 PM on December 7, 2019 [5 favorites]
This is assuming that your January 2019 withdrawal satisfied your 2019 required distribution. Anything more than that, presumably your December withdrawal, is not an RMD but simply an ordinary withdrawal, so you can do a rollover within 60 days back into the IRA.
Also note that you can only do one rollover per 12 months. So if you rollover this excess withdrawal, you can't do it again for 12 months - so don't screw up next year!
But here is another thing to consider. Are you sure this second RMD is not required? If you turned 70.5 in 2018, you had the option of taking one RMD in 2018 and one in 2019. Or the option of delaying your first, 2018, RMD until 2019 and then doing your second RMD also in 2019. So your 2018 and 2019 RMDs are both in 2019. So in that case, it would be entirely correct to withdraw two RMDs in the 2019. This is a one-time case for your first two RMDs. Thereafter you must only do one per year.
So first, make sure this isn't a required second RMD. If you did an RMD in 2018, then you also only do one in 2019.
posted by JackFlash at 2:30 PM on December 7, 2019 [5 favorites]
One more item regarding your tax return for 2019. Since you did two withdrawals, both will be reported on a 1099-R from your custodian. But if you rollover the second withdrawal back into your IRA, only the first, the RMD amount, is taxable.
So on your Form 1040 line 4a, you enter the combined total amount withdrawn as indicated on your 1099-R. And then on line 4b you enter only the taxable amount, which would be your RMD. The taxable amount is the total withdrawn minus the amount rolled back into the IRA. And typically you would attach a statement indicating the amount that is rolled over. Or you can just write "ROLLOVER" next to line 4. Either way it indicates to the IRS why only part of the total withdrawal is taxable. Otherwise the IRS is going to wonder why the taxable amount is less than the total amount.
posted by JackFlash at 12:57 PM on December 8, 2019
So on your Form 1040 line 4a, you enter the combined total amount withdrawn as indicated on your 1099-R. And then on line 4b you enter only the taxable amount, which would be your RMD. The taxable amount is the total withdrawn minus the amount rolled back into the IRA. And typically you would attach a statement indicating the amount that is rolled over. Or you can just write "ROLLOVER" next to line 4. Either way it indicates to the IRS why only part of the total withdrawal is taxable. Otherwise the IRS is going to wonder why the taxable amount is less than the total amount.
posted by JackFlash at 12:57 PM on December 8, 2019
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Option 2 would be call the company that manages your IRA and ask them.
posted by metahawk at 1:35 PM on December 7, 2019