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The check should have been deposited to your IRA as a rollover not a contribution. The 60 day rollover limitation rule would not apply since the check was made payable to the IRA trustee and not to you. You should contact your IRA trustee and advise them that an error was made when the check was deposited and request that they correct it by changing the description of the deposit from a contribution to a rollover. Also, request that they issue a corrected Form 5498 reflecting this change. Since the check was issued to you in 2008, you should have received a Form 1099-R for that year and reported it as a rollover on your 2008 return.
Many thanks for your reply. I have a couple of follow-up bits. (1) Indeed, when I went to my IRA fund's local office in April, 2009, I _did_ explain to them that the $5545 was from my 401K and that I was presenting the check to the IRA fund as a rollover, not a contribution. (Sorry if I gave you that impression that it was presented as a contribution.) When I had contact with them in May, 2009, and they told me that they had characterized it as a contribution, and not a rollover, and that I may have tax consequences. I realized that they characterized it as a contribution because of the 60-day rule. And that was that, as far as they were concerned - they didn't care that the check had been made out to them, and not me, and that their 1st-level supervisor wouldn't change the characterization. Time passed, and when I got my tax paperwork from them, I discovered very close to April 15 that they listed it as a contribution, and not a rollover. (2) It sounds like you're confident that I'll be able to convince them to issue a corrected 5498, based on the facts of situation. Are you basing your confidence on a past case involving exactly this kind of issue where the check was misplaced and written out to the fund, and not an individual taxpayer? Is there some case or IRS form I can cite?
"May, 2009, and they told me" should be "May, 2009 they told me"
(I'll eventually hit the "Accept" button, but this is my first time here, and I'm worried that if I do, the "Reply" button will go away, and that the conversation will be over!)
Since the check was made out to the IRA trustee and not to you, you did not have constructive receipt of the funds. You could not have cashed the check. Hence, the 60 day rollover rule was not applicable. I have previously researched this issue and found this response from the IRS. I will search for it and forward it to you if I find it.
See C.2. on page 2 - http://files.ali-aba.org/thumbs/datastorage/skoobesruoc/pdf/05ColemanChangnAcctVPC0523_thumb.pdf
This isn't the source I was looking for but these regulations provide more details on direct rollovers. Q&A #4 describes your scenario:
A IRC Section 402(f) notice must be provided to a participant when he/she is eligible to take a distribution from a qualified plan. Here is an example of the language that must be on the notice:
From page 10 of the IRS Notice 2009-68 - http://www.irs.gov/pub/irs-drop/n-09-68.pdf
"How do I do a rollover?
There are two ways to do a rollover. You can do either a direct rollover or a 60-day
This excerpt clearly differentiates between a "Direct Rollover" which does not have a 60 day requirement or a "60 day rollover" (which would be defined as an indirect rollover).
Since the check was made payable to the IRA trustee then it was processed as a Direct Rollover.
See Private Letter ruling #NNN-NN-NNNNin the link below: