ROTH IRA Transfer Mistake (beyond 60 days)

[Guest martykoepp]

About 100 days ago, by mistake, I transferred Roth IRA funds into a SEP IRA account. My Roth account was

a conversion (paid tax over four years) from 1998. Is it possible to reverse this error? Will I have to pay taxes

and/or penaty? The current holder (Trustee?) of the Roth money that now sits in the SEP account, wants me to

complete an "IRA Removal of Excess" form to get the Roth money out of the SEP account. Now what happens?

[Appleby]

Marty,

Unfortunately, this may be considered an ‘ineligible transfer’, which generally, should be corrected as a ‘return of excess contribution’. What you want to check into is whether the trustee bears any responsibility for this transaction occurring. Many trustees have procedures in place to run checks and balances to ensure transfers occur between ‘like’ accounts (accounts of the same type). If the trustee bears any responsibility, then they may make accommodations to adjust the transaction to a Roth IRA. Try speaking with a supervisor- go as far up as you can. If this can be rectified by having the assets moved/adjusted to a Roth IRA-- you want to make sure it is---otherwise, the assets are technically no longer IRA assets, which means you lose the tax-free benefits

There is no rush to remove the amount as a ‘return of excess’…if you file you tax return by April 15, you have until October 15,2004 to remove the excess---therefore, you do have some time…