Might have made a rollover mistake. Can I put the money back?

[Stwicky]

I rolled over a large 401k earlier this month. Within that 401k I had $190,000 after tax contribution, $95 (yes, just $95) in Roth, and $500,000 in traditional. I chose to have the 401k rolled as follows:

$500,000 to traditional IRA
$95 to a Roth IRA
$190,000 distributed to my bank account.

Now I realize that I should have kept the $190,000 in the Roth until I need the cash.

Can I replace it into the Roth IRA along with the $95 and have it be a part of the rollover? I'm well within the 60 days.

 

[Sunset]

Can't answer your question, but moving $190K to anything other than IRA is taxable income.

I would have rolled it all to the IRA , except for the $95 to the Roth.

Then take out from the IRA if/when I needed the money. So I I spend $60K I get taxed on the $60K , instead of $190K but only spent some of it in a year.

When I do a Roth conversion (IRA ->Roth) I do what I think I will leave in there.

 

[cathy63]

Yes, you should be able to roll over the $150K to a Roth IRA. Make sure to inform the custodian that it's a rollover. They should know because that's much higher than the allowed 2024 contribution, but if they don't code it correctly in their system that will cause problems later on, so just make sure it's clear when you make the deposit.

I think you'll get multiple 1099-R forms from the 401k custodian. One of them should show a rollover to the tIRA (code G in box 7). Another one should show a normal or early distribution of $190 depending on your age (code 2 or 7 in box 7) and either the $190K is also shown in box 2a or in box 9b so none of it is taxable. The third one would be the $95 rollover to the Roth (code H in box 7).

 

[cathy63]

Can't answer your question, but moving $190K to anything other than IRA is taxable income.

I would have rolled it all to the IRA , except for the $95 to the Roth.

Then take out from the IRA if/when I needed the money. So I I spend $60K I get taxed on the $60K , instead of $190K but only spent some of it in a year.

When I do a Roth conversion (IRA ->Roth) I do what I think I will leave in there.

The $190K was after tax contributions to the 401k, so it's only partially taxable if the plan treated it as a pro-rata distribution. If it had gone directly to the Roth IRA, then it definitely wouldn't have been taxable (per IRS Internal Revenue Bulletin: 2014-41 | Internal Revenue Service) and I think Stwicky can still treat it as such as long as he does it within the 60 day timeframe.

 

[Koolau]

No idea where you stand with taxable income from this move, but usually you want to limit taxable AND avoid any "gotchas" such as IRMAA for those on Medicare. There are other gotchas based on taxable income. Be sure to see where you stand with these potential pitfalls.

Check with a professional tax person on what you can do (probably within 60 days of the roll over.)

 

[CardsFan]

OP, I hope you are able to make the correction.

I made the exact same mistake when I rolled over a 401k when the Megacorp sold our unit in 2005. It was "only" about $75k, but that would be over $300k tax free today if invested in the market.

 

[MarieIG]

I would do the 60 day roll over. If you haven't done so yet, I would contract the location holding your IRAs and confirm how they can ensure it will be properly labeled as a 60 day rollover.

I was very nervous about doing my first one - and walked my check into a Fidelity office, confirmed that it was designated as a 60 day roll over, submitted the Fidelity form identifying it as a 60 day roll over, and getting a receipt from Fidelity that it was a 60 day roll over.