Fixing misallocated RMD for 2024 at Fidelity

[urban]

I would appreciate an advice how to handle my RMD for 2024 from IRA at Fidelity after it was messed up.

I needed to make my first RMD for 2024 before 04/01/2025. Fidelity web interface displays calculated RMDs for 2024 and 2025 years, and allows to withdraw money and allocate it to either 2024 or 2025 year.

Yesterday I was on the phone with a Fidelity rep about other issue, and decided to let him make my distribution for 2024. I specifically stated it is for 2024. Before submitting the withdraw to my linked bank, he read it back for me to confirm before submitting, reading it correctly for 2024 year. It was on the recorded line.

Today I looked at my IRA account, and see that yesterday distribution was applied to 2025 year. So I called to Fidelity and talked to two reps. Both of them, after reviewing my account and consulting with others, stated pretty much the same:

1. Fidelity will not redo anything. Their software does not allow to change anything what already was done regarding to this matter.
2. Even though it looks like on my side I can allocate IRA distribution to 2024 or 2025 year, on their side software does not allow it. They can allocate distribution only to the year it was made, meaning currently to 2025. The rep did not tell me about it yesterday before submitting the distribution.
3. They say it is not a big deal. Before end of this year I should make separate 2025 distribution. Fidelity will provide me with 1099 for 2025 with the amount of total combined distribution. As long as the combined distribution meets RMDs for 2024+2025, and I have my IRA account statements that show that there was a distribution made before 04/01/2025 in the RMD amount required for 2024 year, IRS will not assign a penalty. But I may need to provide additional paperwork to IRS to explain myself. They were kind of vague on that.

So I am not sure whether I should follow #3 as they advise. At this point I do not have much confidence in Fidelity.
The other option as I see it is to sell additional funds in my IRA account to satisfy 2024 RMD, and withdraw it via Fidelity web interface, properly allocating it to 2024. In the end of the year withdraw remainder of 2025 RMD. It looks cleaner.

Here is some numbers. My 2024 RMD is 6,234. 2025 RMD is 8,438.
My yesterday distribution for 2024 that was applied to 2025 was 6,234. For this distribution no any taxes were withdraw. I originally planned almost all 2025 distribution to use for taxes and withdraw in the end of this year.

So what would be the best course of action in this situation? Sorry for the long post. Thank you very much.

[Silk McCue]

The 2024 RMD hasn’t been misallocated. It was taken in this tax year and will be reported along with the 2025 RMD taken later this year on next years taxes. Everyone who has ever done so has had to do the same thing.

Your #3 is correct. You will report the total for both years on next year’s taxes. Very unlikely the IRS would question this and you will have the withdrawal history should it ever be needed.

Numerous threads on this topic over the years.

Cheers

[Asyouwish]

It’s all correct. The 2024 RMD occurred in Calendar Year 2025 so you will get a 2025 Form 1099-R. Later you will take your 2025 RMD also in Calendar Year 2025. This same 1099-R will have the total of both RMDs. This is normal and not an issue with IRS. Your paperwork has the details if the IRS wants a breakdown. (They won’t).

[grampy]

One thing the OP really needs to understand is that the April 1 date is only valid for your very first RMD. And if used, it results in 2 RMDs being taxed in the same year.

All subsequent RMDs must be taken by Dec 31 of a given year. And it is best not to wait that long to apply for RMDs. The earlier the better. I do mine in late November.

[urban]

One thing the OP really needs to understand is that the April 1 date is only valid for your very first RMD. And if used, it results in 2 RMDs being taxed in the same year.

Yes, I am aware of it. Thank you.