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Author: GBoogieNY Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121572  
Subject: Undoing a foolish Roth distribution. Date: 2/9/2001 7:02 PM
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Is it possible to 'undo' an ill-advised Roth distribution? Or at least to avoid taxes and penalties?
My mom has moderate/severe sleep apnea. She just got diagnosed last month and has started treatment. Hopefully she will be just fine soon. Unfortunately, her sleep apnea left her with a lot of cognitive defecits. Memory loss, confusion, poor judgment, etc. Quite frankly I was worried that she had Alzheimer's. In fact, she had been prescribed Aricept, an anti-Alzheimer's drug. I was just about to get a power of attorney over her finances because she was no longer properly managing her money. The good news is she should be just fine in about 4-6 more weeks.
The bad news is that a few months ago (Sept. 2000), when her mind was still very much in a fog due to her sleep disorder, she called up one of her mutual fund companies and requested a check for $10,000 from a Roth IRA which she had converted in 1998. She didn't need the money, and certainly not from a recent Roth conversion.
I still have the check. It has not been cashed. The mutual fund company said they can't do anything because more than 60 days has passed.
Can I approach the IRS and ask for help? I told mom numerous times to leave the Roth alone for 5 years. Will they allow her to 'undo' the distribution? Did the distribution happen if the check never gets cashed? Will they at least not make her pay taxes and a penalty on the distribution?
I've read IRS Form 590 and I'm not exactly sure.
I originally asked TMFKaren, and she suggested I seek the advice of Foolish CPA's.
Thanks Fools!

P.S. Don't ignore snoring, excessive daytime sleepiness, and chronic poor sleep. Sleep disorders are real and they are treatable.
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Author: pmarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46107 of 121572
Subject: Re: Undoing a foolish Roth distribution. Date: 2/9/2001 11:39 PM
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The bad news is that a few months ago (Sept. 2000), when her mind was still very much in a fog due to her sleep disorder, she called up one of her mutual fund companies and requested a check for $10,000 from a Roth IRA which she had converted in 1998. She didn't need the money, and certainly not from a recent Roth conversion.
I still have the check. It has not been cashed. The mutual fund company said they can't do anything because more than 60 days has passed.
Can I approach the IRS and ask for help?


You can, but I don't see any basis in law for a remedy. Sorry.

Phil Marti
VITA Volunteer

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Author: Bob78164 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 46162 of 121572
Subject: Re: Undoing a foolish Roth distribution. Date: 2/11/2001 1:02 AM
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pmarti:

You can, but I don't see any basis in law for a remedy. Sorry.

I reply:

Hi, Phil, good to see you back in your old incarnation. As to your substantive comment, I'm not so sure all hope is lost. Is the distribution made when the company cuts the check or when the check is cashed? The safer assumption, of course, is that the distribution is made when the company cuts the check and I can certainly see good arguments for that position. But I can also see potential arguments for the contrary position. The amount of money just may be enough to seek professional help. --Bob

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