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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28430
Experience:  Taxes, Immigration, Labor Relations
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I RECENTLY CLOSED OUT A GARIX IRA ROLLOVER ACCOUNT AND HAD A

Customer Question

I RECENTLY CLOSED OUT A GARIX IRA ROLLOVER ACCOUNT AND HAD A LARGE AMOUNT OF MONEY WITHHELD AS "TEFRA WITHHOLDING". IT IS MY INTENTION TO ROLL OVER THIS WITHDRAWAL INTO ANOTHER IRA ACCOUNT WITH A DIFFERENT BROKERAGE FIRM WITHIN A FEW DAYS. HOW DO I GET THE FEFRA WITHHOLDING DOLLARS BACK TO PUT IN THE NEW IRA ACCOUNT.
C HINES
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Hi and welcome to our site!
To avoid TEFRA withholding - we should not ask for cash distribution - and request direct trustee-to-trustee transfer.
In your situation - withheld amount is sent to the IRS and credited to your tax account.
You may ONLY have it refunded when you file the tax return and show on that tax return that your tax liability is less than total withholding - and the difference will be refunded by the IRS.
.
For IRA distribution purposes - withholding is treated as distribution. To avoid taxable distribution the only option to come with the money from other sources and have the full amount deposited into another IRA account withing 60 days.
It doesn't matter which funds you will use - as long as you you will have the full distributed amount deposited into a new IRA account - that will be classified as rollover.

Expert:  Lev replied 1 year ago.

Your withholding woudl generally be reported on form 1099R box 4.
You will use that amount to claim a refund on your tax return.
Let me know if you need any help with reporting.

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