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We distributed $47k from wife's (age 52) regular IRA last year, 2021, to improve home.

Realize now we should have distributed from my (age 64) regular IRA instead.

Now we're paying penalty for early distribution.

Any way to reverse this?

Maybe distribute $47k from mine and rollover into hers, and ask IRS to forgive?

2 Answers 2

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Any way to reverse this? Maybe distribute $47k from mine and rollover into hers, and ask IRS to forgive?

No, The "I" in IRA stands for Individual. Your IRA and your spouse's IRA are not interchangeable. You cannot rollover money from your IRA to your spouse's.

You would have been able to "fix" this within 60 days of the withdrawal by depositing the money back and treating it as an indirect rollover, but the time has now passed. Unfortunately you're on the hook.

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My daughter, a highly experienced tax CPA and manager with Deloitte, recommends contacting IRS and asking about their one-time correction.

If they agree, this will save us the $6k penalty, and I'll distribute the $47k from my IRA roll and it back into my wife's IRA, and all shall be as it should have been.

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  • She might be thinking of retirement plan self correction process, which is not applicable to you since IRA is not a retirement plan eligible per Rev. Procedure 2021-30. But sure, wouldn't hurt asking. If you have a daughter who's a CPA specializing in tax, why isn't she helping you to begin with?
    – littleadv
    Apr 18, 2022 at 15:16

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