Can IRA owner rollover error be repaired during current tax year cycle?
In February, 60 year old IRA owner takes $8,000 distribution.
In March, replaces funds as a “Rollover Contribution”.
In December, changes IRA custodians,
UNFORTUNATELY,
Original custodian sends check made out to IRA owner’s name (e.g. a rollover) instead of new Custodian’s name (e.g. a custodian-to-custodian transfer).
IRA owner deposits check in new IRA with Custodian B.
Since IRA owner has not completed tax forms for the year, can he remedy through re-characterization?
For example:
Re-characterize $6,500 of the $8,000 March Rollover Contribution as a Regular Contribution,
Withdraw the extra $1,500 as an excess contribution,
Deposit the extra $1,500 as a regular contribution to spouse IRA to mitigate the income tax?
Or are other remedies available, given that this is within the current tax year cycle?
