Kaye, I owe you a huge apology. After reading your last post I went back into my account documentation to try and figure out how I could have been so stupid. As is turns out, I was not so stupid as to what I did, but was in how I remembered things and how I characterized it to you. It appears that I did the right thing with the RMD and it’s reversal but in contemplating what to do next, i.e. whether after the withdrawal was put back into the IRA I could then afford from the standpoint of a hit on my taxes, to go ahead with cashing in that amount and converting it to a Roth. In actual fact, I thought about it for so long that I thought that I had done it – and conflated the two events and timelines. I know this probably doesn’t make much sense now to you at this point so if you will allow me to just start over. Please ignore the ramblings of my previous posts about a Roth – there is none, there never was one. Here is what really happened:
On March 6, 2020 I withdrew $70k from my Fidelity IRA based on the amount I knew I needed to satisfy my RMD for 2020. The money went into my cash management account with Fidelity [not to any Roth account or any other IRA]. On May 28, 2020 I contacted Fidelity after hearing of the CARES relief canceling the RMD requirement for 2020, and had them put the money back into the same IRA it came out of [the money was still in my cash account so this was easy]. They did this and noted on my statements that the funds were going back as “rollover shares”. So far, so good. I recently received a 1099R showing the money coming out of the IRA but am puzzled as to what to show the IRS to prove that it went back in. So, finally, my question: What document or notation needs to be generated that tells the IRS that the money went back into the IRA and that the net effect as far as taxation is zero? I suspect that the answer has to do with a “2020 Form 5498 IRA Contribution Information” that I just received from Fidelity showing a line 2 rollover contribution of $71,260.81. And I further suspect the difference between the $71,260.81 and $70,000 reflects the fact that a specific number of shares were transferred out and back in [not a dollar amount] and the $1,260.81 difference is the amount the shares appreciated between the transactions. So if all of this is correct, do I include form 5498 with my taxes or account for it’s numbers somewhere on my 1040?
Again, my sincere apologies for all of the confusion. Your efforts are appreciated more than you can know. Let me know if the above now makes sense so I can put this to bed and stop bothering you.