Hello,
I posted this topic at bogleheads.org and was recommended that I post here as well. Hoping for any help I can get.
When I became eligible to receive employer contributions into an IRA account, I went to my credit union (since my wife and I have several accounts there already). I had no knowledge of the different types of IRAs and simply told them that I needed an IRA account to accept employer contributions. The teller opened a traditional IRA for me, apparently not realizing that this was the wrong account to accept matching contributions from an employer. My employer began sending checks to this account (flagged as SIMPLE contributions) with my contribution plus a matching amount, and no red flags were raised. This was in January of 2014. Fast forward to three weeks ago. My credit union's IRA department was internally audited, and my account was flagged as being coded incorrectly—it couldn't accept contributions to a SIMPLE IRA, because the credit union does not offer a SIMPLE IRA. News to me. I'm currently opening a new SIMPLE IRA account to accept future contributions, but I need to get the money that was incorrectly placed in the traditional IRA out and into the SIMPLE, where it should have been all along. Both my employer and myself have filed our taxes as if the account was a SIMPLE this whole time, so technically it shouldn't make a difference to the IRS if the amount that moves to the SIMPLE is identical to the amount my employer reported contributing. The traditional IRA would be closed as if it never existed (because it shouldn't have). How do I do this without incurring some sort of penalty? It's not a rollover, nor am I withdrawing funds early—the credit union simply made an error and opened the wrong account for me. Any suggestions would be extremely welcome. I've tried to research this online and it seems to be such an oddball occurrence that I can't find mention of it anywhere. Thanks, Ryan
