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Repairing excess Rollover with Re-characterization?


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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?


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Proposed strategy makes sense to me.

From what little reading I've done just now: If we could go back in time, we'd treat the $8000 as a Roth conversion, put it in a Roth account and then immediately recharacterize it back to a traditional IRA. But the proverbial cat is already out of the bag.

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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