USA IRA Question

[sancarloscyclist]

Hi, I am hoping someone can help me. I inherited an IRA from my Mom many years ago. I put the money into 2 CGM mutual funds. Late last year, I received notice from CGM that they were going out of business and that I needed to liquidate my funds. I met with Fidelity with the purpose of transferring the funds to them into a new IRA account. Fidelity sent the paperwork to CGM and requested that they send them the money. Instead, CGM sent me a check which I immediately sent to Fidelity.

I just got a 1099 from CGM which showed that they actually withheld federal tax which of course I did not want them to do. When I called them, they claimed that Fidelity did not send them all of the needed paperwork so they did not process this as a transfer and because the funds are closed, they cannot correct the problem.

So what the heck do I do? It's past the 60 days. I am using TurboTax Deluxe to do my taxes? Is there a fix so that the total amount of the check sent to me + the withheld tax count as an IRA transfer? Please help and I am confused as hell. I thank you for your help.

 

[BIG E]

As the TV commercial advertised years ago "Ask the Box"

 

[computerwiz32]

Hi, I am hoping someone can help me. I inherited an IRA from my Mom many years ago. I put the money into 2 CGM mutual funds. Late last year, I received notice from CGM that they were going out of business and that I needed to liquidate my funds. I met with Fidelity with the purpose of transferring the funds to them into a new IRA account. Fidelity sent the paperwork to CGM and requested that they send them the money. Instead, CGM sent me a check which I immediately sent to Fidelity.

I just got a 1099 from CGM which showed that they actually withheld federal tax which of course I did not want them to do. When I called them, they claimed that Fidelity did not send them all of the needed paperwork so they did not process this as a transfer and because the funds are closed, they cannot correct the problem.

So what the heck do I do? It's past the 60 days. I am using TurboTax Deluxe to do my taxes? Is there a fix so that the total amount of the check sent to me + the withheld tax count as an IRA transfer? Please help and I am confused as hell. I thank you for your help.

You cannot fix this. The rule is that you have 60 days to cash the check and issue the same amount to fidelity. If 60 days have passed then that check amount is subject to tax. This is stated in the IRS internal revenue code 408 (d)(3)(B).
If you look at the link below there's only certain circumstances where they might still permit it to not be taxed if certain situations
occurred that led you to be past the 60 days mark. It's listed in the link below. Other than that if a situation that you had to caused you to be late past the 60 day you will have to contact the IRS and it has to be a reasonable situation. Other than that then you have to include that amount to be taxable. Which is they they withheld the federal taxes.

You can read more here:

Rollovers of retirement plan and IRA distributions | Internal Revenue Service

Find out how and when to roll over your retirement plan or IRA to another retirement plan or IRA. Review a chart of allowable rollover transactions.

www.irs.gov

 

[sancarloscyclist]

I actually deposited the checks from the old CGM IRA into the new Fidelity IRA account within 60 days. The only amount not deposited was the tax withheld. Are you saying that all of the IRA including the amount of the checks is taxable or just the tax withheld amount? Please advise.