I have a client who contributed over 40k to his IRA-SEP for 2020. Turns out he is not eligible to contribute for 2020 as he has a loss for his business. The contribution shows up on his form 5498.
To make matters worse he has 1099R for 2020 for 90K for monies he took out of the IRA-SEP.
I have asked the advisor to see if the mutual fund company will at least classify 40K as a return of contributions for 2020 as opposed to a taxable distribution. I am not sure if this can be done or if they will make the change.
Anyone have any other suggestions?
Thank You