A new client closed two IRA's(one Roth, one traditional) at a major brokerage firm with the intent to roll it over into two bank accounts, which he did in timely fashion right after receiving the two checks. Evidently, neither the financial planner at the firm nor the bank knew about the limit of one indirect transfer in a yearly period.
So now one has to be treated as a distribution which puts him way over the yearly limit. He can take it out of one before we file to eliminate the penalty on excess contributions, logically the Roth since only the gains will be taxed. My question is, is there any kind of do over way around this mess. Any sort of leniency by the IRS for a mistake that most people wouldn't know of. The planner definitely should have but didn't. The bank could have stopped the rollover on one but didn't know the rule either. Any help will be greatly appreciated.
So now one has to be treated as a distribution which puts him way over the yearly limit. He can take it out of one before we file to eliminate the penalty on excess contributions, logically the Roth since only the gains will be taxed. My question is, is there any kind of do over way around this mess. Any sort of leniency by the IRS for a mistake that most people wouldn't know of. The planner definitely should have but didn't. The bank could have stopped the rollover on one but didn't know the rule either. Any help will be greatly appreciated.