IRA rollover fail

[mcbreck]

Client took money out of their IRA bank account and moved it to a CD at another bank. Upon arrival today and talking about it we realize the new bank didn't move the money into an IRA account. Anyone ever have a bank recharacterize such a mistake as having been put into an IRA as it should have been?

[mcbreck]

Bank says NOPE. I swore I had a client years ago where the bank allowed them to do it after the fact and risk the 60 day rollover question by the IRS and qualifying for a waiver. Maybe the difference was that time it was the bank's error and this time it was the client's error. Senior citizens need help on this stuff (like taxes).

[Catherine]

Sometimes you can't rescue people from their errors. 

[Lynn EA USTCP in Louisiana]

See if the client qualifies for self reporting and penalty waiver 

see https://www.cpa-wfy.com/did-you-miss-the-60-day-deadline-for-your-ira-rollover/

[mcbreck]

14 hours ago, Lynn EA USTCP in Louisiana said:

See if the client qualifies for self reporting and penalty waiver 

see https://www.cpa-wfy.com/did-you-miss-the-60-day-deadline-for-your-ira-rollover/

We would have gone this route but the bank has told them 2x that they will NOT move the money into an IRA at this point. I was the one who asked him 2x to ask them and that was their response both times. Can't get a waiver if the money is still sitting outside an IRA. The bank will charge them a fee for early withdrawal of a CD and in their minds it is better to pay the tax than the fee. Not my problem anymore as he doesn't seem interested in me calling the bank for them.

 

(Bank keeps says they'll only move their allowed contribution and the clients aren't even interested in that.)

[Abby Normal]

Do they have other money he could put into an IRA?

This is why IRA transfers should always be trustee-to-trustee.

[Lee B]

Several years ago I had a client who did the 60 day rollover in multiple pieces (Not trustee to trustee )

The rollovers were all done within 60 days, but the stock broker receiving the rollover funds dropped the ball on the paperwork.

The IRS took the position that the rollovers didn't qualify. My client was very late getting the IRS letters to me

After sending in all of the documentation 3 different times, the IRS agreed to most of the rollovers but insisted that about $ 2,000  didn't qualify and was taxable,

Finally I told my client that I had done everything that I could do and advised him that it was up to him to either pay the tax or to call the IRS himself.

A classic case of "how not to do rollovers!