Bank of America Incorrectly Reported 1099-R

Two summers ago I decided to convert my Bank of America Traditional IRA to a TD Ameritrade Roth IRA. The reps at Bank of America told me that I needed to first convert the Traditional IRA into a Roth IRA at Bank of America and then I could transfer it out.

Yesterday I received a letter from the IRS stating that I owe them $20,624 for “early distributions” from two IRAs. Apparently, Bank of America sent two Forms 1099-R to the IRS stating that I took two full distributions (one from the Traditional IRA during the conversion and one from the Roth IRA during the transfer) from the same lump sum of cash. Add in two years of interest and penalties and that gives me an effective tax rate of 93.6% for retirement distributions that I never actually took.

In the end I will get this resolved, but in the meantime, now I have to pay a CPA to help me resolve the issue.

Thanks Bank of America!

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